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Medical, agric boost insurance premiums

source: IRA

Insurers record a 17.5% growth in gross underwritten premiums to Shs856bn in 2018

Kampala, Uganda | ISAAC KHISA | A surge in uptake of medical and agriculture insurance services coupled with increased distribution network helped Uganda’s insurance industry to record a 17.5% growth in gross underwritten premiums to Shs856bn in 2018.

This is more than double insurers recorded in 2012 when gross underwritten premiums stood at Shs351.23bn.

The increase in demand for medical insurance saw this segment record a 24.5% growth in gross underwritten premiums from Shs161bn in 2017 to Shs200.45bn in 2018 while agriculture insurance recorded a slight increase in gross underwritten premiums from Shs5.2bn to Shs5.3bn during the same period under review.

Financial results released on May 09 also show that non-life business continued to dominate the insurance industry in terms of composition, though its relative share has continued to decline over the years.

The relative share of non-life business in total premium declined almost four percentage points from 70% in 2017 to 66.6% in 2018.

Though life insurance attracts less business volumes, it continued to grow relatively faster at 28.6% to Shs216.9bn during the period under review.

On the other hand, non-life insurance business recorded a 12.3% growth in gross underwritten premiums to Shs570bn. Health Membership Organisations (HMOs) that include, among others, Case Medical Clinic, International Air Ambulance and AAR recorded a 31% growth to Shs69.1bn.

The contribution of the industry towards the country’s Gross Domestic Product also known as insurance penetration increased from 0.81% to 0.84%. This, however, is far less compared to other countries in the region. Currently, Kenya’s insurance penetration stands at 3.4%, Tanzania 2.3% and Rwanda 1%.

Similarly, the industry’s net asset base increased by 11% from Shs458bn to Shs508bn signalling a growing strength of insurers to handle more insurance risks locally as well as provide adequate protection to the insuring public.

Claims payments which is the core value that the insurance industry offers to the policyholders and beneficiaries increased by 11.9% to Shs326.7bn.

Ibrahim Kaddunabbi Lubega, the Chief Executive Officer at the Insurance Regulatory Authority of Uganda (IRA-U) said innovations into the development of customer-centric products and strategic partnerships have improved both product affordability and accessibility.

“There were also improved distribution platforms – bancasurance and mobile technologies as well as enhanced public awareness campaigns undertaken by various insurance sector stakeholders,” he said.

He also said the company’s redress platform, Complaints Bureau, has enhanced public confidence in insurance as the public is now aware that there is a dependable agency to seek for help in case of a challenge.

Last year, the Complaints Bureau received 153 complaints compared with 139 in the previous year, as at the end of last December, 101 cases had been resolved.

Uganda’s insurance industry has 32 insurance companies, one micro insurance firm, one re-insurer, and five HMOs. In addition, the industry has 14 commercial banks and two credit institutions that have been granted license for insurance products in partnership with the insurers.

Going ahead

The insurance industry is expected to remain on a positive growth curve in 2019 owed to the projected growth of the economy, according to Kaddunabbi.

Uganda’s economy is projected to grow at 6.3% in the current financial year 2018/19, the same rate is projected for the following year 2019/2020, following a recovery from the slump during financial year 2016/17, according to the International Monetary Fund.

“Increased investment in infrastructure investment such as Standard Gauge Railway, oil pipeline, Uganda Airlines and the CCTV cameras in metropolitan Kampala should further stimulate the market to form consortiums to underwrite these risks,” he said, “the country’s reforms to improve business environment will drive stronger growth over the short and medium term.”

Ibrahim Kaddunabbi Lubega

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