Kaddunabbi Ibrahim Lubega, the IRA Chief Executive Officer
Uganda’s insurance industry reported better performance over the year despite the lagging effects of international shocks that have affected businesses and economies worldwide, including Uganda.
According to the performance report, the insurance companies in Uganda managed to sell insurance worth 1.085 trillion Shillings by the end of the third quarter of the year 2022, up from the 912 billion Shillings recorded for the same period in 2021.
This is a growth of 18 percent in the gross premiums, compared to the growth of 15 percent which the Uganda Insurance Regulatory Authority, IRA, had set as the target for the industry to grow at.
This, according to the regulator, shows that the annual performance will be better than that of 2021. Most of the growth came from the life insurance segment though non-life still accounts for the largest share of the gross underwritten premiums.
Out of this, 476.5 Billion Shillings was paid out in claims by the insurance policy holders and was higher than the total claim payout worth 363.1 Billion Shillings regarded in the previous period.
Kaddunabbi Ibrahim Lubega, the IRA Chief Executive Officer says that the growth in payouts is the main achievement of the industry because the more claims are settled, the more attractive the industry becomes to the public.
Uganda’s insurance performance is one of the lowest globally and even in Africa, with penetration being consistently less than 1 percent of the population.
This is mainly because of a lack of awareness about the importance of insurance and also the lack of confidence that in case of a loss, the insurer can easily come to the rescue.
Lubega said as the companies are encouraged to focus more on prompt settlement of claims, there is a growing knowledge amongst the public that in case of dissatisfaction with a company, a client can seek redress from the regulator.
He vows that just like fraudulent claims, insurance companies who fail or refuse to pay genuine claims will be handled according to the laws which provide for investigations, arrests, and prosecution.
The growth in the insurance business activities was also boosted by the recent innovations and legislations that gave the industry and the public more options for accessing the services.
These include bancassurance, which has been growing steadily over the last two years, and, during the year up to the end of the third quarter, 102 billion shillings in premiums had been handled through bancassurance.
Other channels are insurance agents who are expected to grow from the current 3,000 to 5,000 by the end of the year and online platforms.
These contributed to more than half of the insurance business, but they come at the expense of brokers who only handled 27 percent of the business.
Lubega says the problem with this would be that the participation of the brokers declines which means that the insuring public is not getting adequate professional services when making decisions to invest.
As other segments were registering growth, the gross premiums that went to the Health Membership Organizations, HMOs, declined, to the concern of the regulator.
These are health service providers who accept regular cash deposits from their clients to insure against any medical needs in the future or are supported by their employers to access these health insurance schemes.
Their gross premiums fell from 36 billion to 33 billion Shillings. Lubega said when they noticed the slowdown in the performance of the HMOs, they asked the service providers to find out and list the challenges that they are facing so that they can be tackled by the regulator, which they have not yet done.
A head of one of the organizations who preferred anonymity, said some service providers have disappointed the clients with poor quality services, hence the loss of trust.
Jonan Kisakye, the Chief Executive Uganda Insurers Association, called for a law that will compel the government to insure its buildings as is happening in Tanzania.
This will not only help insure people who use the buildings but also increase the business opportunities for the insurance companies, according to him.
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