By Aloysious Kasoma
The Uganda Insurers Association (UIA) leadership is optimistic that Uganda’s insurance penetration will pick up soon as more people appreciate the role of insurance.
The umbrella organization for all the insurance companies in Uganda embarked on efforts to create awareness and encourage uptake of Life insurance in Uganda sometime back and says it is registering remarkable growth in the life area.
According to Miriam Magala, the outgoing UIA CEO, the campaign kicked off on their social media pages featuring children answering a series of questions about how they envision life without their parents and guardians.
“We’re in the second year of our campaign and there is a great impact from year one although the penetration is still below 1%. Life insurance has been growing between 25%-30% specifically for individual lives,” Magala said.
She however explained that the significant impact shall be seen in September this year and a significant change in 5 years to come.
UIA came up with a 10 year market development plan two years ago. She added that Life insurance generally falls under four categories:
Whole Life Insurance policies which cover the entire life time of the policy holder. The premium is paid till the expiry of an agreed period and the policy pays out at death- whenever death occurs during the policyholders’ lifetime.
The second is Term Insurance policies which is taken for specific periods of time and because the time/period is specified, premiums are either paid throughout that period or as a single premium summing all future payments.
Third is Endowment policies. Like term insurance policies, this is taken for specified periods and premiums are paid throughout the term of the policy or until death-whichever occurs first.
These are primarily for financial benefit of policy holder, and secondly for protection of family in case of death.
4th is Pension Plans/Annuities which allow you to pay regular premiums until the usual retirement age (usually 60 years) after which the insurer makes monthly, quarterly or annual pension payments to you until you die.
Magala noted that with a relatively steady and growing economy, there is an increase in the number of Ugandans who can afford insurance, but many of them lack awareness about the policies and their benefits.
“By focusing on life insurance, UIA will help families, businesses, employers, and other parties to protect against a financial loss that occurs when someone dies or is no longer able to work for certain reasons. Additionally, through life insurance, Ugandans will get a cushion during their old age when their ability to engage in productive work is minimal,” she noted.
Throughout 2017, the association carried out countrywide insurance literacy campaign through which they created awareness for Life Insurance, Agriculture Insurance, Workers Compensation Insurance, Motor Third Party and Comprehensive insurance.
By the end of March 2018, she noted that they had realized 34% increment in numbers of farmers taking on agricultural insurance from 40,616 to 53,634.
According to IRA-U, the industry registered a 16% growth in insurance premiums to Shs737billion last year, up from Shs 634billion 2016.
The 2017 growth was supported by increased uptake of policies for agriculture, medical, infrastructure development projects and innovations geared towards development of customer-centric products.
Out of the total gross written premiums, non-life insurance constituted 70% (Shs 516bn), life premiums 22.86% (Shs168bn) while Health Membership Organization constituted 7.135% (Shs52.5bn).
However, industry’s non-life underwriting profitability reduced by 14% from Shs12.4bilion in 2016 to Shs10.7bn in 2017 due to the increase in claims payouts.
The gross claims paid for both life and no-life including HMOs increased by 11.7% to Shs291billion while the industry’s net asset base increased by 15% to Shs474bn during the same period under review.
Uganda has 20 non-life and nine life insurance firms, one re-insurance and five health membership organizations.
Uganda’s insurance penetration is still the lowest in the East African region standing at 0.8% of the Gross Domestic Product. Kenya’s stands at 2.73% and Tanzania at 1%.