Insurance regulator, experts share views at high profile meeting in Kampala
How do you convince more Ugandans to buy insurance? That was the main issue discussed during a breakfast meeting for the country’s insurance firms held at Kampala Serena Hotel on Feb.23.
The Chief Executive Officer of the Insurance Regulatory Authority (IRA-U), Ibrahim Kaddunabi, told his guests that the insurance industry has been struggling for answers for years.
He said reform of the sector had resulted in better claims settlement and that Ugandan were spending more money on insurance; from Shs296.83 billion in 2011 to Shs611.13 billion in 2015, but the numbers of those buying insurance remain low. The main insurance being bought is for fire, medical, motor, marine, bonds, and workers compensation.
Kaddunabi said the sector continues to suffer several “reputational challenges and apathy from the public”.
The discussion was held against the backdrop of two global insurance firms announcing plans to exit the Ugandan market.
In February, AON said it was exiting 10 African markets including Uganda, Kenya and Tanzania through share sale to Capitalworks, an independent alternative asset management firm based in South Africa.
Meanwhile in November last year, American insurance giant AIG – that opened business in Uganda in 1962 said it was exiting the country’s insurance market as part of its global strategy to leave weaker markets. Analyst cited the prevailing tough economic environment as the main reason for their exits.
According to latest data from IRA-U, all the money spent on buying insurance in Uganda is equivalent to just only 1% of the economy.
That level, which experts call insurance penetration, is among the lowest in the East African region. Kenya’s insurance penetration now stands at 3.4%, Tanzania, 2.3% in Tanzania, and Rwanda 1%. The average penetration for Africa is 6%.
It is highest in South Africa at 14.1%, followed by Namibia and Mauritius at 7.2% and 6% respectively, according to Peter Tripe, an insurance consultant at Deloitte South Africa.