Brokers, agents told to prove their relevance
Kampala, Uganda | ISAAC KHISA | Predictions for Uganda’s insurance industry this year is positive but some players are likely to face uncertain future in their operations.
The consensus view among industry players is that the industry will put a strong performance this year, carrying on the momentum of 2018.
However, this does not mean that every player or the insuring public will be trouble-free.
Following the coming into force of the Insurance Act of 2017, no insurance broker or agent, will effective January this year, collect any premiums from the insuring public either in cash or cheque on behalf of the insurance company or Health Membership Organisation as has been the case before.
This is based on the view that a section of brokers and agents use premiums collected to carry out their own other business, resulting into late payment of premiums and hence affecting claim settlement.
Latest statistics from the industry regulator, Insurance Regulatory Authority (IRA) of Uganda show that the insurance premiums collected through the brokerage distribution channel stood at Shs238.1bn in 2017. This accounts for 32.68 % of the insurance industry premium collected during the period under review.
With insurance brokers and agents standing at 35 and 1, 296, respectively, their gross commission increased by 21% to 40bn during the same period under review.
However, Mariam Nalunkuuma, the senior communication officer at the IRA told The Independent in an interview that the new development is not intended to drive insurance brokers and agents out of business but to show their relevance in the industry.
She said insurance brokers as well as agents do not have a role to play with regard to premium collections on behalf of insurers.
“We are only interested in ensuring that each player in the industry performs his or her role,” she said. “The role of insurance brokers is to give professional risk advice to prospective insurance customers, their prices as well as claims processing.”
Uganda has 22 non-life and nine life insurance firms, one re-insurance and five Health Membership Organizations.
This development comes as the region tries to harmonise financial laws and regulations with the drafting of the East African Community Insurance Bill, 2018.
2018 overall performance
Overall, the insurance industry is expected to maintain the growth momentum driven by uptake of agriculture and life insurance policies and investment in government infrastructure.
From January 2017-September 2018, the total number of farmers enrolled on the agricutlure insurance scheme was 70,111 with the government contribution to the subsidy amounting to Shs6.38bn.
Similarly, the improvement in the economy is expected to drive investment in various sectors, further boosting growth in insurance premiums.