Fabian Kasi, the Managing Director at Centenary Bank and former chairman Uganda Bankers Association/Courtesy Photo
The Insurance Industry has been growing at about 10 percent per annum in terms of Gross Written Premium, a rate analysts call commendable, but penetration remains at a low 0.8 percent.
This is among the lowest rates in Africa, whose average penetration is between 2.1 and 2.6 percent, with Kenya’s, for example, hovering around 2.3. The African penetration rate is also the lowest in the world.
Insurance penetration is a measure of the industry’s importance to the economy, measured as the percentage of the Gross Written Premium (money paid by customers to buy insurance policies) to the gross domestic product of the country.
On the other hand, banking has grown much faster and penetration is about 60 percent, according to the Uganda Bankers Association, with commercial banks alone having deposits of about 50 trillion shillings, while lower-tier financial institutions boast even more.
The Insurance sector has in recent years stepped up efforts to ensure that more Ugandans take up insurance products to not only grow the industry but also increase the available sources of capital for investments.
The two industries now think that they can learn from each other as services and operations are getting more integrated, especially with the adoption of technology.
Fabian Kasi, the Managing Director of Centenary Bank and former chairman Uganda Bankers Association, says trust, simplicity and transparency are the main factors that bankers have focused on and can help insurance grow if adopted.
However, Kasi warned that as technology grows and is adopted by the financial sector, cyber fraud is becoming a major challenge and will not only be limited to the banking but also to the insurance industries.
He called for the industry to learn from the banking sector and put in place and constantly improve security measures, including having a dedicated cybersecurity expert.
While this is expensive, Kasi says, in the long run, it saves the company from unforeseen losses and also instills confidence among their customers.
The Insurance Regulatory Authority invited the Kasi to give the experience of the Centenary Bank which he heads, but also the whole banking industry of which he was chairman, to offer lessons to insurers.
Since banks started distributing insurance products to the public under the Bancassurance platform, the operations of the two industries are getting closer to each other, hence the need to collaborate.
IRA Chief Executive Officer, Ibrahim Kaddunabbi Lubega said they agree with the bankers that transparency and innovation will enable them to reach sections of the public that have not been targeted so far.
Both banking and insurance face complaints from customers touching on the unfair treatment of borrowers (for banking) and policyholders (for insurance) and this is the major source of mistrust between the service providers and the public.
It has also been considered the main reason why parts of the public have shunned the two industries, for fear of either losing out or not getting the expected benefits.
Fabian Kasi points out that people, especially borrowers do not take time to read what is now referred to as ‘small print’ where details, including rights and duties of the lender and the borrowers, are explained.
He says they have now developed a “Key Fact Document” which they encourage the clients to read or even read out to them before they sign the agreement so that it becomes a point of reference through the loan period.
IRA’s Kaddunabbi Lubega welcomes this as a good lesson from the bankers to the insurance players because it further creates trust between the service provider and the consumer.
He stresses the importance of transparency as very vital to the success of the industry, adding that is vital to study the journey the bankers have walked to reach where the industry is currently.
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