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We look at key issues affecting the insurance industry, possible solutions and the future.

REgiONAl iNDuSTRy Financial integration set to grow insurance.

Perceptions> What people believe about insurance ...P.7

kaMpala, october 17, 2017

what you need to know about insurance

2 insurance. tuesday, OctOber 17, 2017

Daily Monitorwww.monitor.co.ugtable of contents

others, are some of the factors hindering penetration.This insurance sector review, the first of its kind, expounds on the key issues affecting the industry, providing possible solutions to the low penetration level and the future.Daily Monitor, in this special pull-out, takes a keen look into the state of Uganda’s insurance sector. Inside, we engage experts on the sticky issue of the negative perception about insurance and how this impacts on enetration level, what the

National Health Insurance Scheme has in store for you, bancassurance, agriculture insurance, life insurance and micro-insurance, among others.We also look at how the insurance industry is ripe for disruption and the

must-do for insurers to remain relevant. While this is very low, we can look at the other side of the coin which shows

that the industry is beaming with huge opportunities. Today, lifestyle diseases have become very expensive to treat, with just a

handful of people affording to seek medical treatment abroad. This is why the National Health Insurance Scheme has been designed to save ordinary

Ugandans from out-of-pocket expenditures spent on medical bills. For people living on at least a dollar per day, insurance is considered as a

luxury rather a need. That is why insurers should design products that target low-income earners in a quest to widen their outreach.This means there is still room for growth in this industry. Currently, the industry boasts of 29 insurance companies of which 21 are non-life insurers while eight are life insurers. It also has one re-insurance company charged with addressing premium flight to other economies. There are also 36 insurance brokers, 23 loss assessors, five health membership organisations and more than 2,000 insurance agents. The insurance industry is growing steadily, with Shs634 billion gross premiums underwritten in 2016, compared to Shs352 billion in 2012.

Insurers, therefore, need to set their eyes on those unchartered paths to realise their growth dreams. Insurers for instance, need to

tap into the lower end of the market in addition to the growing middle class.

The Uganda Insurers Association, for instance, is eyeing the oil and gas sector as a possible growth area within the next five years.

Uganda needs a bigger and vibrant insurance industry that will offer cover to the country’s major investments.

EDITORIAlInsurance is synonymous with being a pitiable subject of discussion among the public. Uganda’s insurance is struggling with low penetration levels of less than one per cent. Why? lack of trust in the industry, inadequate knowledge on its products, its limited reach to the informal sector, the perception that insurance is expensive, and the fear of not being able to service

it continuously, among

Kenya insurance shareholder funds increase by 6.5%

insurance. is published by Monitor Publications Limited, a Nation Media Group Company. ©2017, All rights reserved.

Kenya’s insurance industry equity grew 6.5 per cent to stand at Ksh141.25 billion (shs5 trillion) as at end of June this

year from Ksh132.68 billion (shs4.7 trillion) reported in the first half of 2016. this has been attributed to capital restructuring following the changes in regulatory capital requirements.

data from the Insurance regulatory authority (Ira) indicates that some of the key components of shareholders’ funds were retained earnings at 36.4 per cent, paid up capital at 29.7 per cent and statutory reserves at 14.9 per cent.

Others were share premium at four per cent, revaluation reserves at 3.2 per cent and other reserves at 11.7 per cent.

under the new law, general insurance companies are required to have at least Ksh600 million (shs21 billion) as capital, while life insurers must be capitalised to the tune of Ksh400 million (shs14b). [James Ngunjiri , business Daily]

news > fund

news > executive appointment

Former Insurance regulatory authority (Ira) chief executive sammy Makove has joined consultancy Kenbright actuarial and

Financial services as head of its new regulatory affairs and advisory division.

Mr Makove, who exited the insurance regulator last November after 15 years at the helm, will be based in Nairobi.

the firm said Mr Makove’s role would be augmented by an international adviser, Holly bakke, a former insurance commissioner of banking and insurance for New Jersey, usa.

the firm’s subsidiaries include, Kenbright Insurance brokers, Kenbright Healthcare administrators and Kenbright actuarial and Financial services.

Mr Makove was a long serving founder member of Ira and was until his retirement last year the only ceO since formation eight years ago. the Ira was carved out as an independent body from the treasury. [brian Ngugi, business Daily]

Firm taps ex-IRA boss Makove to head unit

news> insurance

Nairobi Private Equity firm steps up Uganda, Rwanda businessA subsidiary of Private equity (Pe) firm

Fusion capital has invested in rwanda and uganda as it seeks to grow footprint

in east africa. Fusion Insurance brokers (FIb), licensed in 2015 by Insurance regulatory authority (Ira), is offering general insurance and specialties underwriting among other products. Fusion capital chief executive daniel Kamau said the rwanda and uganda markets are both attractive and challenging for new entrants, due to the low insurance penetration levels and a growing economy. the firm is also seeking to work with local agencies. “We are not increasing our operational costs yet taking advantage of our brand presence in these countries,” said Mr Kamau. Fusion capital was established in 2006 as a real estate investment and fund management firm and operates in Kenya, uganda, tanzania, rwanda and united Kingdom. [James Ngunjiri, business Daily]

executive editor Charles Odoobo Bichachi editor – DailiesMargaret Vuchiri -Alumaitrade & Finance editorWilliam Lubuulwa assistant editor - businessLydia Namono Wesongacommercial ManagerJudith Komuhendo Kalyegira business ManagerJoan BisasocontributorsDorothy Nakaweesi, Ismail Musa Ladu, Eronie Kamukama, Christine Kasemiire, Martin Luther Oketch, Lillian Namagembe, Jonathan Adengo, Mariam Magala, Mariam Nalunkuuma.Graphics designerMuhammed Tamale cover photoStephen Otage

in this issue >

Future Bright days ahead for insurance.

pg. 11

PercePtIONs

Perceptions about insurance. pg. 7

INterVIeW

Interview with Insurance Regulatory Authority. pg. 4

PerFOrMaNce

An analysis of insurance industry in Uganda. pg. 14&15

regIONal INsuraNce

Regional financial integration set to grow insurance. pg. 8

INNOVatION

Insurance Industry ripe for disruption. pg. 5

MIcr0-INsuraNce Micro-insurance: A case for low-

income earners. pg. 16

lIFe INsuraNce

What drives growth of life insurance. pg.18

reFOrMs

Reforms in new insurance law. pg. 19

baNcassuraNce

Hopes hinged on Bancassurance to deepen penetration. pg. 17

HealtH INsuraNce

How National Health Insurance Scheme will benefit Ugandans. pg. 6

Daily Monitoradvert tuesday, OctOber 17, 2017 insurance. 3

prUDeNtIal


Daily Monitorwww.monitor.co.uginterview

How does the insurance sector look like in Uganda?

The insurance sector is very promising. It has more than doubled over years since 2011 to date. We have seen the big players com-ing to Uganda to partake in what we do. Even the existing companies are merging and becoming stronger for what lies ahead.

To-date, the industry has 29 insur-ance companies, (21 non-life insur-ers and eight life insurers) and one re-insurance company, (addressing the issue of premium flight to other economies, thereby contributing to the national Gross Domestic Product (GDP). Thirty six insurance brokers, 23 loss assessors, five health mem-bership organisations and more than 2,000 insurance agents.

In terms of growth and perfor-mance, the insurance industry is growing steadily, with Shs634 billion gross premiums underwritten in the year 2016, compared to Shs352 bil-lion in 2012. Non-life insurance busi-ness has continued to dominate the industry in terms of premiums un-derwritten with 70.9 per cent in 2016 and life insurance business account-ing for 20.87 per cent.

currently, there is very low penetration of this sector in Uganda, why is that?

The current rate is 0.73 per cent down from 0.86 per cent in 2014. Rebasing of GDP (done in November 2014) from the base year of 2002 to 2009 resulted into an increase in GDP by about 13 per cent. As a result, this has had a significant impact on the insurance penetration whose compu-tation now uses the rebased GDP as a denominator.

Aside from the impact of the re-based GDP, a significant proportion of the population is yet to adopt insur-ance as a risk management mecha-nism. But with introduction of Micro insurance products and Bancassur-ance distribution channels, the insur-ance spread is likely to increase and impact on insurance penetration.

What is Ira doing to curb this prob-lem?

We are encouraging players to de-velop policies which address needs of the people. To address the low pen-etration levels and pitiable percep-tion amongst the public, the Author-

ity has initiated consumer education and public awareness campaigns across the country aimed at increas-ing public awareness on the need and benefits of insurance. Of recent, you see more of insurance-related activi-ties everywhere you go. However, the less than 1 per cent penetration level is an indication that there are still huge investment opportunities in the insurance industry. For example with the Bancassurance relation-ship and creation of new distribution channels, the penetration levels will improve considering the banks’ coun-trywide network that insurers will be relying on.

What other challenges do you face as an industry?

The industry is lagging behind in innovating insurance products tailor-made or for the low-income earners. Some government entities have not yet appreciated the importance of insurance, for example, many gov-ernment properties and assets are not insured; the National Health Insurance Scheme has not yet been passed into law, the liberalisation of the Pension scheme has not yet been effected. We are also still lacking col-laboration with some enforcement agencies particularly on Workers Compensation (Ministry of Gender, Labour and Social Development).

The private sector has also not embraced insurance as a risk man-agement tool. The industry is still lacking enough skilled /professional manpower to handle complex insur-ance products.

How are you curtailing these chal-lenges?

The development of micro-insur-ance guidelines to the players is fa-cilitating the development of innova-tive products for low-income earners who have not been accessing insur-ance services.

We introduced the Agricultural insurance subsidy scheme to help farmers access agricultural insur-ance. Government is anticipated to increase investment in the insurance sector to boost agricultural produc-tivity.

The Authority has also proposed the amendment of Motor Third Party Act which will address public con-cerns on its benefits and mistrust gap

that is existing especially on settle-ment of claims. This, we believe, will stir growth in the insurance industry in the coming years.

The Authority is collaborating with Uganda Revenue Authority to ensure that all companies importing goods into Uganda get Marine Cargo cover by the locally licensed insurers.

another issue with insurance firms is the failure or delay in compensation for claims. How rampant are these cases and how are you holding firms account-able?

The gross claims paid for both life and Non-life insurance including Health Maintenance Organisations (limited care from health centres on the plan) has increased from Shs213 billion in 2015 to Shs259 billion in 2016. This represents a 21.5 per cent growth of claims paid out.

Previously, claims management was a challenge in the industry and was contributing to the poor percep-tion and low penetration of the insur-ance in Uganda. However, in 2012, the Authority issued claims settlement and management guidelines to en-hance transparency, disclosure of information to policyholders during the claims processing. Any insurance-related complaint is handled by the Authority’s complaints bureau which is impartial.

Scams perpetuated by clients who want to defraud companies have hit the sector. What are you doing to curb this?

On the increasing number of insur-ance fraud cases, the Authority has continuously advised insurers to re-assess their processes plus policies to manage and mitigate fraud risks they are exposed to. It is important to note that fraud risk in insurance is a value chain which starts from within the insurance company whereby the employees, for example, will misuse confidential information and collude with frausters.

Externally, the fraud risk exists when registering a client, underwrit-ing, reinsurance and claims process.

What are some of the innovations intro-duced over the years to boost insurance in Uganda?

In May 2017, the President assented to the Insurance Act 2017 paving way for major reforms in the insurance law and operations in the insurance industry. The amendment and pass-ing of the Financial Institutions Act, has also paved way for Bancassur-ance allowing banks to sell insurance products, hence creating for distri-

bution channels. The IRA has already issued guidelines to that effect. The same applies to Micro-insurance guidelines which were issued last year (2016) and paved way for the li-censing of the first micro-insurance company on the market which ap-peals to the critical masses such as the life, agriculture insurance, funeral insurance, education insurance and medical insurance.

Insurers are investing in digital channels to meet the demands of customers enabling them buy poli-cies using online platforms. They are also embracing digital migration trends such as payment of Motor Third Party insurance through mo-bile money platforms.

the oil sector is a new industry that requires insurance services. How pre-pared are you to seize this opportu-nity?

The Authority has created regula-tory environment supporting the creation of oil and gas pool syndicate among players. The principle has been approved by the Authority. The syndicate presents an opportunity to increase penetration by preventing large premiums from the oil sector from being expatriated by foreign in-surance firms.

Through the Uganda Insurers As-sociation, about 15 insurers have ex-pressed interest to be part of the syn-dicate and that will see local insurers tap into the oil and gas sector.

What regulations are missing to guide the sector?

We have approved the oil and gas consortium to underwrite the oil and gas risks locally which will boost our economy.

The much desired National Health Insurance Scheme is yet to be tabled and passed by Parliament. We would also like to see the amendment of the Motor Third party Act to address the needs of today, subsequently increas-ing insurance penetration. The Motor Third Party Act passed in 1998 met a currency reform which held high value for money but is not the case at the moment. So we want to review the limits of compensation.

‘Insurance lags behind in innovating products for low-income earners’Insurance Regulatory Authority (IRA) is tasked with regulating activities within the insurance industry. In an interview, Daily Monitor’s christine kasemiire engages Alhaji Ibrahim Lubega Kaddunabbi, the chief executive officer IRA, who dissects the state of the industry.

a mother and child who live in Namuwongo b Zone, a slum near kampala capital city. Insurers should design more products for low-income earners. PHOTO BY EDGAR R. BATTE

Alhaji Ibrahim Lubega Kaddunabbi is the chief executive officer of Insurance Regulatory Authority.

AlhAji ibRAhiM l. KADDuNAbbi

tuesday, OctOber 17, 2017. insurance. 5

Daily Monitorwww.monitor.co.ug

technology

The technological wave is slowly catching up with the insurance industry.

This transformation is propelled by financial technology which has already disrupted the finan-cial sector.

This digital disruption is slowly spilling over with innova-tions such as mobile insurance and other micro offerings target-ing small income earners.

This trend is being felt world over where isurtechs - technology innovations designed to squeeze out savings and efficiency from the current insurance industry model, are already transform-ing customer user experience by bridging the gaps and causing disruption in the digital era.

“Disrupters are fast-moving companies, often startups, fo-cused on a particular innovative technology or process in every-thing from mobile payments to insurance. They have been at-tacking some of the most prof-itable elements of the financial services value chain. This has been particularly damaging to the incumbents who have his-torically subsidised important but less profitable service offer-ings,” says the Financial Services Technology 2020 and Beyond: Embracing disruption report by PricewaterhouseCoopers (PwC).

The PwC report says in the insurance industry, advances in processing capacity, customer profiling and risk analytics are now opening the way for a new generation of ‘smart’ policies.

While being as affordable and

easy to understand and compare as today’s off-the- shelf prod-ucts, these policies could be both fully customised to individuals and able to adapt to their chang-ing needs. Crucially, the techno-logical developments that are making this new generation of policies possible would also be making it easier for new entrants to break into the market at rela-tively little cost.

In Uganda, the disruption is being caused by new products

that are easily affordable and re-spond to the needs of the buyers. Mr Saul Sseremba, the chief ex-ecutive officer of the Insurance Institute of Uganda, says new insurance products are coming in to serve the growing number of people who need insurance services.

“There is a lot of untapped po-tential because the insurance in-dustry is still in its early years in Uganda. This means new players now have a chance to innovate to tap into the uninsured popula-tions,” he says.

According to the Africa Insur-ance Barometer report 2017 – re-leased during Africa insurance summit in June– there is still room for growth on the continent because of the low penetration and investment opportunities. In Uganda, one such investment op-portunity is the National Health Insurance Scheme (NHIS), of which a bill was drafted in 2012 and only recently got a Cer-tificate of Financial Compliance from the ministry of Finance. Only Uganda within the East Af-rican Community has no NHIS and once it is rolled out, the pen-etration of insurance services is expected to rise.

Opportunity“Africa’s low insurance pen-

etration remains the continent’s biggest opportunity, provided the broader array of products and innovative channels are used to access the continent’s corpo-rate array of products and partly untapped retail consumer base, including its growing middle class,” the report, further reads.

Micro insuranceAnother frontier for growth in

Insurance in Uganda lies in the micro insurance products which

have largely helped to increase the scale of insured by offering affordable products for the low income earners.

According to the Landscape of Micro insurance Africa re-port 2015, the total micro insur-ance market in the Africa region amounted to almost $ 647 mil-lion in premiums in 2014.

Looking at comparable data only, premiums show growth of 31 per cent since 2011. The re-lated growth in insured matched this at 32 per cent, indicating that products have generally kept similar price levels.

However, the increased use of Mobile Network Operators has resulted in a subset of products that offer very low premiums for limited coverage, with 20 insur-ers providing data for mobile

network distributed products. In Uganda, aYo holdings partnered with MTN to provide insurance cover for low income earners. This means one can take a cover for as low as Shs5,000 and pay their premiums using mobile money.

These programmes accounted for 13 per cent of the identified lives covered in the region, but just 1 per cent of the total written premiums. In many cases, the av-erage premium per person per year was less than $ 1.

Performance in 2016According to the Insurance

Regulatory Authority of Uganda (IRA) report, in the year 2016, the gross premium underwrit-ten by the insurance industry increased from Shs612 billion

in 2015 to Shs634 billion in 2016 representing an overall growth of 3.6 per cent.

The report released in July says the non-life insurance busi-ness continued to dominate the industry in terms of premiums underwritten with 70.9 per cent written premiums down from 75.99 per cent in 2015.

The report says life insurance, on the other hand, accounted for 20.87 per cent of the premiums which was an increase from 16.36 per cent in 2015.

The Health Membership Or-ganisations (HMO’s) accounted for 8.22 per cent of the premi-ums, an increase from 7.67 per cent in 2015. The report recorded a drop in the insurance penetra-tion from 0.76 in 2015 to 0.73 in 2016. Insurance penetration is a measure of the premiums under written against the GDP.

industry compositionIn 2017, the IRA licensed 29

insurance companies (20 non-life or general insurance compa-nies and nine Life companies), 6 HMO’s, 35 Insurance brokers and 21 loss assessors.

RegulationWith the growth of industry

offering, the Insurance Act 2017 was passed in June, 2017 was passed this year with notifica-tions to cater for the changing face of the industry. The Act in-troduced changes which affect aspects of supervision. Supervi-sion will shift from Compliance-Based to Risk-based Supervision. The new law also introduced perpetual licensing.

With the amendments to the Financial Institutions Act which, among others, now allows for bancassurance (the selling of insurance products through the bank channel), the bancassur-ance regulations were passed in July, 2017.

Which way?Early this year, the Uganda In-

surers Association launched the sector’s 10-year market growth and development Plan which in-tends to see insurance penetra-tion grow from less than 1 per cent to 3 per cent by 2025.

The Plan intends to increase penetration through stream-lining a series of actions and activities under four key areas; increased understanding and appreciation of insurance, lob-bying and advocacy, leverag-ing on technology and capacity building.

Ms Magala says although the sector experienced minimal overall growth in 2016.

“At 4 per cent, in 2017, we ex-pect to grow between 6 and 8 per cent due to changes in the 2017/2018 financial year related to Motor Third Party Insurance, Marine Insurance and Agri-culture Insurance,” Ms Magala says.

Mobile insurance is among the innovations picking up in the insurance industry. STOCK PHOTO

Insurance industry ripe for disruptionSince there is a lot of untapped potential in Uganda’s insurance industry which is still young, new players can innovate to tap into the uninsured populations, Jonathan adengo writes.

634bq

GroSS preMIUM (IN UGaNDa SHIllINGS) UNDerWrItteN bY tHe INSUraNce

INDUStrY

source: Insurance Regulatory Authority of Uganda

iNSuRANCE

Industry composition. In 2017, the IRA licensed 29 insurance companies (20 non-life or general insurance companies and nine Life companies), 6 HMO’s, 35 Insurance brokers and 21 loss assessors.

It is now a requirement to check for Motor third Party Insurance as part of the mandatory vehicle inspection checks being carried out by sgs automotive uganda (sgs) which should see compliance with this insurance rise in turn boosting both premium and tax revenue collection for the country.

the government will continue with the pilot uganda agriculture Insurance subsidy (uaIs) programme to subsidise agriculture insurance premiums for both small and large scale farmers to guarantee the returns from crop and livestock farming.

the uaIs became operational in July 2016 and has covered 23,000 small and large scale farmers. It is expected that as

awareness for this programme grows, so will uptake which will translate into premium growth.

With respect to Marine Insurance, the Insurance regulatory authority of uganda has been mandated to implement the provisions in the Insurance act that makes it mandatory that insurance policies on ships, aircraft or other vehicles registered in uganda; and on goods imported from other countries, except personal effects and donations be issued by Insurance companies licensed under the act.

the Ira also approved the Oil and gas co-Insurance syndicate in 2016 allowing the local industry to seek avenues to provide insurance support to the nascent Oil and gas sector.

NEW ChANgES, OPPORTuNiTiES


health insurance

Ugandans are optimistic that the long-awaited Health In-surance law that will give

birth to the National Health Insur-ance Scheme (NHIS) for all citizenry is not far from enactment.

In July, the ministry of Finance awarded a certificate of financial implications to the National Health Insurance Bill, 2012 paving way for the creation of the scheme.

The NHIS is expected to relieve ordinary Ugandans from directly pulling money out of their pockets to spend on medical bills.

Drafted 13 years ago, the Health Insurance Bill, according to Health minister Dr Jane Ruth Aceng will ini-tially see about 25 per cent of the 34 million Ugandans covered once it is enacted into law.

“The Bill awaits to be tabled in Cab-inet for approval before sending it back to the ministry [of Health] from where it will be re-tabled in Parlia-ment,” Dr Aceng says.

ContributionsOnce it is approved, civil servants

and formally employed Ugandans will be required to contribute 4 per cent of their gross salary to which employers will top up with 4 per cent to make 8 per cent monthly contribu-tions towards the pool.

According to government, the Health Insurance scheme will help to relieve households from the ills of out of pocket expenditure by providing financial protection to clients against catastrophic health expenditure such as organ transplant.

Currently, one needs about $25,000(about Shs90m) to cater for the cheapest kidney transplant in India which is the commonest desti-nation for most Ugandans who seek treatment abroad.

The cost is, however, far beyond the $85 (about 303,709) income that Ugandans earn monthly on average, according to the Uganda National Household Survey Report 2009/2010.

As such, the scheme is expected to get rid of the constant media adver-tisements fundraising for life-saving operations out of the country.

Dr Jackson Amone, the chairman of the Medical Board, charged with qualifying and recommending pa-tients for treatment says a total of 14 patients were recommended in 2016. However, those who cannot afford the treatment do not bother reach-ing out to the Medical Board.

He, however, notes: “It is not man-datory for all public servants to qual-ify to be sponsored by the govern-

ment to go abroad for treatment.”But Dr Aceng explains that the

scheme for the start will cater for only basic treatment until other packages including one for specialised treat-ment such as complex surgeries and organ transplant, will be brought on board.

She adds that with time, other citi-zens in the informal sector will be in-cluded on the pool to benefit.

Through cost sharing where pa-tients will be required to contribute under the same scheme, the cost of organ transplant is also expected to go down to $8,000(about 28m) once Mulago Hospital starts carrying out

transplants locally.Nevertheless, the health insurance

players under the Uganda Commu-nity Health Insurance have since crit-icised the Scheme, saying in its cur-rent form, it is only targeting 10 per cent of the population in the formal sector. These, the players, say will lock out more than 80 per cent of the

population in the informal sector.

EligibilityUnder Section 4 of the proposed

Bill, eligibility is for public servants and all employees in the formal sec-tor who are residents in Uganda.

The 2013 National Health Ac-counts survey, an international tech-nique for tracking financial flows in a country‘s health sector, indicated that government spends $11 per capita (Shs39,600) or roughly about $1(3,600) a month.

Similarly, government spends Shs7, 020 per person per capital at Mulago National Referral Hospital which is far below the required Shs100,000 per capita.

This health financing gap, Dr Bat-erana Byarugaba, the executive di-rector of Mulago Hospital, says will easily be solved by the NHIS where patients will be contributing to the cost of treatment as opposed to free treatment.

The commission for Microeco-nomics for Health recommends that government should annually spend at least $34(122,400) on the health of every citizen –from its own re-sources.

Statistics from ministry of Health also indicate that Malaria, HIV/Aids, pneumonia, anaemia and tuberculo-sis are the leading causes of mortality in Uganda.

The VIP’s treatment abroad on rec-ommendation of the Medical Board costs tax payers an average of Shs72m for every official, excluding that of air tickets, upkeep and expenditure on attendants.

a medical officer takes blood samples from a patient. the National Health Insurance cover will relieve households from the ills of out-of-pocket expenditure by providing financial protection to citizens against catastrophic health expenditures. PHOTO BY RACHEL MABALA

How National Health Insurance Scheme will benefit Ugandans The National Health Insurance Scheme is expected to relieve ordinary Ugandans from directly pulling money out of their pockets to spend on medical bills, lilian Namagembe writes.

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source: Auditor General’s report 2016

tuesday, OctOber 17, 2017 insurance. 7

perceptions Daily Monitorwww.monitor.co.ug

Despite the long existence of insurance in Uganda, the industry still has challenges

with getting the public on board. Presently, insurance has only 0.73 per cent penetration in Uganda.

According to Mr Douglas Se-makadde, the business development manager at Phoenix of Uganda As-surance Company Limited, their major customers are corporate or-ganisations although, the Small and Medium Enterprise (SMEs) clients are more in number but mostly less valued in premiums. He said despite positive perception of clients on fold, lack of awareness especially among the uninsured public is still a chal-lenge.

“With our customers, their percep-tion is positive since they are already in the fold. With the ones approached, the struggle to get them informed still exists. But we are breaking bar-riers,” he says.

The fearsAccording to Ms Cynthia Nakowa,

a risk assessor at Equity bank and former employee at UAP insurance company, people have a perception that the insurance companies do not pay claims which guarantees lack of trust from the claimants hence avert-ing progress.

She also reveals that people in Uganda see no reason to partake in insuring themselves or their prop-erties because of the low disposable income.

“The public members I have inter-acted with are of the view that insur-

ance companies do not pay claims. But I believe if people do not have enough disposable income, they will never think about getting an insur-ance policy,” she says.

Reiterating Ms Nakowa’s state-ments is Ms Ann Muhangi, the man-aging director at Wholesome consult, saying it is sad that Ugandans do not take insurance important yet for business, it is rather paramount for growth and sustainability.

The business consultant says re-luctance in investing in insurance for most SMEs is only an issue of poor planning, they only tend to the now and not future plans. The proprietors merely get money and start up a busi-ness without thought of risk control, which could prove detrimental to a business, a major difference with the larger corporations.

Ms Muhangi says Small and Me-dium Enterprises (SMEs) are scared and use excuses of inadequate funds which limit them from venturing into the insurance industry, a statement she dismisses, saying if someone can afford to start up a business, they can also get involved in insuring them be-cause it is affordable.

Furthermore, she says people do not believe in insurance because they think it will be too tiresome to demand for claims after demise of property. They believe they will get lost in demanding, losing more time and money.

“People are scared of it yet it is the future. They do not believe in it because they have a feeling it will be tiresome. They also blame the small

capital base which keeps them main-taining a short-term business plan and not the long-term, they say, if I don’t have enough money for my business, where will I get the one for insurance?” she says.

Furthermore, owing to the future direction of business, in particular equity financing, she says insurance is the new future because it gives an investor confidence and buffer to recognise that even in calamities or any unavoidable circumstances, his or her investment could be compen-sated and reinstated.

Ms Muhangi says in future, it could be a requirement from investors be-fore investing huge sums of money in a business.

That is why she advises SMEs to in-

vest in insurance, lest they face losses when danger strikes.

However, Ms Nakowa believes that unless insurance companies intro-duce products for low-income earn-ers, who make up a big portion of the country, insurance will maintain the challenge of low penetration in Uganda.

Contrary to Ms Nakowa, the chief executive officer of Insurance Regu-latory Authority, Mr Alhaji Ibrahim Lubega Kaddunnabbi, says insurance should not be a balance remained expense. He said Ugandans should move from that mindset and prior-itise insurance because it safeguards the property they buy with alot of money and they should value it too by insuring and protecting it.

A difficult economy, among other reasons, has made insurance a tough sell as people have other priorities for their Shillings, writes christine kasemiire.

perceptions about insurance industry

Jubilee

Mr Parag shah, the chief finance officer at Madhvani group limited, says the company insures with east african underwriters because it is inevitable to have risks. the insurance they pay for is a guarantee of compensation in case of any risks. the group has vast policies such as Marine insurance, cash insurance,

fidelity insurance, buildings and medical insurance, among others.

He said: “We take all opportunity to mitigate risk of uncertainty which is part of any business.”

Mr Patrick lubwama, the marketing manager at Hass Petroleum, says they insure their company with uaP to transfer risk to the risk takers (insurance company).

Why iNSuRE?

an illustration of the negative attitude towards insurance. Some people think insurance companies do not pay claims and avoid it altogether. ILLUSTRATION BY DANNY BARONGO



regional insurance

fee,” Mr Nduati explains. He adds: “In Kenya, it is called harambee.

Medical bills are a classic example — we raise money after a person dies in hospital, not before.”

The system is inherently expensive, very inefficient and leaves those involved trau-matised. The notion that people can con-tribute to a harambee before a tragic event happens is alien to most them.

He adds that the insurance industry needs to invest heavily in this form of civic-edu-cation.

low tech useOn technology’s contribution to low pen-

etration, Mr Nduati says the insurance in-dustry is still very traditional, meaning it has not embraced new technologies as ag-gressively as other sectors.

“We have seen endeavours towards digi-tal and mobile distribution but the uptake is

still low. We also haven’t integrated systems with service providers like doctors and ga-rages choosing to still work in a paper envi-ronment which is expensive and inefficient,” he adds.

In Mr Nduati’s view: “Business intelligence and data analytics is the low hanging fruit to drive product development and growth.”

The low uptake is worsened by mistrust of insurance players, negative perception of insurance due to historical reasons by po-tential uninsured public, poor services and recent collapse of insurance firms at 80 per cent.

Insurance Regulatory Authority (IRA) chief executive officer Kaddunabi Lubega is optimistic about the industry’s growth.

Mr Lubega says: “With support from the East African Community, we have developed the East African insurance policy to keep premiums in the region to boost insurance growth.”

Measures Regional authorities are developing the

East Africa insurance law to integrate the member countries’ insurance laws so that premiums do not leave the region.

“We are also encouraging insurance com-panies to share knowledge at the regional level to fill the knowledge gap,” Mr Lubega says.

Much as the national laws and East Africa’s law will be harmonised to work within juris-diction, the EA law will take precedence.

Way forwardDemand for both life and non-life insur-

ance products is expected to continue rising as more households in East Africa’s economy join the middle income class, as the market for project risk coverages soars driven by the ongoing investment in infrastructural projects across the region.

However, the region still faces its own set of challenges. Whether it is how to maximise information fluency in the age of big data, meet moving compliance targets during a time of regulatory uncertainty or satisfying an increasingly demanding and sophisti-cated consumer, insurers have their hands full.

To facilitate sustainable growth and tap into these emerging opportunities, innova-tion, nimbleness and collaboration will be important.

Regional heads of State signed the East African Monetary Union which will see the mem-

ber countries consolidate their financial institutions such as banking and insur-ance services.

The opening up if implemented, will put member countries under one um-brella which will create opportunities for the insurance sector to grow.

Mr Peter Nduati, the chief executive officer of Resolution Health East Africa, says the regional insurance industry has witnessed growth over the past five years, although the continent’s penetra-tion ration remains low.

“The insurance penetration ratio, which is the gross value of insurance premiums as a percentage of Gross Do-mestic Product, is often used as a mea-sure of how developed a country’s insur-ance market is,” Mr Nduati notes.

PenetrationIn terms of regional insurance pen-

etration, Kenya ranks among the top insurance markets on the continent, behind South Africa, Namibia and Mau-ritius, despite the industry’s poor per-formance in Africa.

Kenya’s penetration at 3.1 per cent is well above the 2.6 per cent average

for emerging markets. In comparison, Uganda’s penetration is around 0.8 per cent while Tanzania’s stands at 2 per cent, Rwanda stands at 2 per cent all well below Africa’s average of 3.5 per cent.

According to a sector report titled: In-surance in Africa, by KPMG — the global network of professional firms providing audit, advisory and tax services — the global average currently stands at 6.5 per cent.

This brings the regional overall av-erage to only 1.5 per cent penetration, meaning there is plenty of opportunity to invest in this sector only if issues slow-ing insurance growth are addressed.

Why low penetrationMr Nduati attributes low penetration

in East Africa to both cultural and tech-nological reasons.

“If you examine more developed mar-kets, the challenge is more technological than cultural,” he says.

Insurance involves transferring risk from you to a third-party ‘underwriter’ at an agreed fee.

“Africans understand the need to transfer cost from an individual to the whole community. But they seem to agree to do this only after a catastrophic event has occurred and certainly not at a

Insurance penetration in East Africa is still low averaging at 1.5 per cent. Daily Monitor’s Dorothy Nakaweesi expounds on what regional authorities are doing to address the issues slowing down insurance.

regional financial integration set to grow insurance

Data analytics is among the things that will drive insurance product development and growth. INTERNET PHOTO

iNSuRANCE MARKET

largest insurance market in Africa. With a volume of $46 billion, or 72 per cent of total African insurance premiums, South Africa is still, by far, Africa’s largest insurance market.

Other major markets. Other major markets include Morocco, Egypt, Kenya and Nigeria, with the top 5 markets accounting for 85 per cent of total premiums.

Fastest growing market. Among the top five markets, Kenya grew fastest in 2015, achieving a compound annual growth rate of slightly more than 10 per cent from 2011 to 2015.

$46bq

eStIMateD VolUMe oF INSUraNce preMIUMS IN

SoUtH aFrIca, tHe larGeSt INSUraNce Market oN tHe

aFrIcaN coNtINeNt



HIll creSt


state of insurance Daily Monitorwww.monitor.co.ug

Insurance contributes a lot to the economic growth of society by provides stability to the func-

tioning of process. This is because the insurance industries develop fi-nancial institutions and reduce un-certainties by improving financial resources.

Considerable attention has been devoted to evaluating the relation-ship between economic growth and financial market deepening. Most of what we have learned relates to bank-ing systems and securities markets – with insurance receiving only a pass-ing mention.

Yet, while insurance, banking, and securities markets are closely related, insurance fulfills somewhat different economic functions than do other fi-nancial services, and in turn requires particular conditions to flourish.

In an interview with Daily Monitor recently, the Finance minister Matia Kasaija said the contribution of insur-ance sector in Uganda’s economy is still very minimal because there are very few insurance businesses in the country. Additionally, insurance ser-vices are not yet spread in all parts of the country.

“The insurance business in this country is still very small because many organisations/companies and people do not take insurance ser-

vices,” he said. Mr Kasaija added: “Few things are

being insured because we insure very limited things thus limiting the con-

tribution of the insurance sector in the economy.”

However, Mr Kasaija said the gov-ernment is promoting the insurance sector in Uganda by providing Ag-riculture Insurance Scheme in part-nership with the commercial banks which is currently doing well because of the subsidies being given out.

In FY 2016/17, Government opera-tionalised the Uganda Agriculture Insurance Scheme. Statistics in the finance ministry show that a number of farmers have benefited and re-ceived insurance cover for both crops and animals, and these include; farm-ers under Nucafe, Centenary Bank, Cairo Bank, Advance Microfinance, Community Funds, Ifish fish farm,

Dejolisa Farm, Biyinzika Farm Ltd, Sr Afro Cheeks, Eclof, Muiis Project, Kaweri, SolaceFarm, Feed the Future and FIT Uganda, Individual farmers, among others. The subsidy utilisa-

tion projections, for the current sea-son, are as per table 4.4 below.

In FY 2017/18, the Finance minis-try said Government will continue implementing the Uganda Agricul-ture Insurance Scheme as a pilot, to further subsidise agriculture insur-ance premiums for both small and large scale farmers to guarantee the returns expected from crop and live-stock farming. The scheme will cover all regions of the country focusing on strategic crops and animals.

As per the Uganda Insurers Asso-ciation, the prospects and businesses to be underwritten in the next six months are estimated at Shs8.2b in total premiums before applying the Government subsidy.

a medical officer takes blood samples from a patient. the National Health insurance cover will relieve households from the ills of out-of-pocket expenditure by providing financial protection to citizens against catastrophic health expenditures. PHOTO BY RACHEL MABALA

Insurance impact still minimal, says kasaijaThe contribution of the insurance sector in Uganda’s economy is still below the required mark. Martin luther oketch engages the Finance minister on why that is the case.

8.2bq

eStIMateD coSt (IN UGaNDa SHIllINGS) oF proSpectS aND bUSINeSSeS to be

UNDerWrItteN IN tHe NeXt SIX MoNtHS

source: Uganda Insurers Association

VAluE ADDED by iNSuRANCE

YEAR amount

2012 shs1.6b

2013 shs1.6b

2014 shs2b

2015 shs2.3b

2016 shs2.7b

What is your experience with insurance?For some, using insurance services has been valuable while others have bad memories of the experience. Daily Monitor’s eronie kamukama randomly spoke to some people about their views on using insurance.

“ I have used insurance for four years now. I have used it for dental, antenatal and giving birth to my two children. I must say they have been good. However, most do not pay for routine tests such as cervical cancer screening. they only want to pay when you are already sick.

CAthERINE KyARIsIIMA, MIdWIFE

“ I use fire, burglary, marine policy, motor cycle, goods in transit, cash in transit and public liability. We get our claims on time. they remind me of my insurance policies and advise me on what to do in case something comes up. but sometimes, they delay to survey the products and the surveyor delays the claim process because he has to give a report to the insurance company.

VINod VARsANI, Md

“ When people’s cars get accidents within the garage and we make a claim with our insurance provider, they respond fast. However, whenever clients bring their cars that are already insured, they spend weeks in the garage because their insurance companies take long to decide on which garage should repair the car depending on the garage’s quotation. I would like to decongest this garage so I would love to see insurance companies pay claims much faster.

MUzAIRU KAsozI, WoRKshoP MANAgER

“ I have used insurance for one year and so far the package is good, especially for pregnant women. It has a wide range of all the hospitals one would dream to deliver from. since delivery is a risk, the insurer even puts more money on your account than you paid because I insured with shs1m, did antenatal worth shs500,000 but I had a balance of shs2.9m on my account.

MoREEN AshAbAhEbWA, ACCoUNtANt


Daily Monitorwww.monitor.co.ugopinion

UIa1/2 page

In July 2017, the Government of Uganda through the background paper to the Bud-get 2017/18, made commitments to grow

and support the insurance industry through three main initiatives; a commitment to the pilot Uganda Agriculture Insurance Scheme (UAIS), the inclusion of a Motor Third Party Insurance check into the mandatory Motor Ve-hicle Inspection process of SGS Automotive and the commitment to ensuring that all imports/exports are insured locally. As a result of these and other initiatives, the industry has projected an average 5 per cent increase in insurance pre-miums for Motor, Agriculture and Marine In-surance in 2017/18.

Performance“Our tentative performance results for the

first half of 2017 indicate an overall 12 per cent

growth in gross premium, an early boost to the initiatives under our 10 Market Growth and Develop-ment Plan. Over the same period, the amount in claims paid increased by 3 per cent- the industry on average pays Shs120b annually in claims,” said Ms Miriam Magala, chief ex-ecutive officer, Uganda Insurers As-sociation.

“We are appreciative of the sup-port that the Government has shown through her commitments this year which further affirms the critical role that insurance plays in growing our economy. As an Association, we have engaged with the relevant Gov-ernment bodies to ensure that the commitments are enforced for the benefit of all our insurance clients,” added Ms Magala.

“We have further enshrined our long-term goals strategically into our Market Growth and Develop-ment Plan to improve customer sat-isfaction. This Plan was developed based on research and interactions with both our current and prospec-tive clients.”

The Market Growth plan intends

to grow insurance penetration from currently less than 1 per cent to 3 per cent over the next 10 years- by among others, addressing knowl-edge gaps through increased aware-ness and sensitisation on insurance, leveraging on technology, lobbying and advocacy and skills develop-ment.

The industry is investing more in the development of more tailor-made products, leveraging on tech-nology in distribution and service provision, educating the public about insurance and developing

the industry’s skills and capacity to meet the increasing needs of the market.

DevelopmentOn the business development

front, developments in regulation such as the amendments to the Fi-nancial Institutions Act 2016 and the Bancassurance Regulations 2017 now make it possible for the indus-try to sell their products through bank networks. The Insurance Act 2017 will also make distribution through non-traditional models possible.

“As a service based industry, our reach is only as good as our innova-tions and distribution capabilities. In addition to these, our claims pro-cess will be key in delivering satis-factory services to our clients, “says Ms Magala.

“We have therefore started by streamlining the claims process for the Motor Third Party Insurance cat-egory as this is the one most people are familiar with by reducing the

number of steps needed to ensure the smooth and timely payment of claims. These, we be-lieve, coupled with the increased sensitisation on insurance will boost the level of confidence that the public has in the industry.”

In addition to looking to the developments in Agriculture, Marine and Motor Insurance, the industry is looking to the Oil and Gas industry as another area of growth over the next three to five years.

ProspectsIn order to ensure the establishment of a vi-

able and strong underwriting facility with the necessary human and financial capacity to un-derwrite oil and gas risks in Uganda, the Oil and Gas Co-Insurance syndicate was established by the insurance companies. The Syndicate was ap-proved by the Insurance Regulatory Authority of Uganda (IRA) in October 2016. The Syndicate currently has 16 members and is now speak-ing with the Oil and Gas industry to ensure that their insurance needs are effectively met and underwritten by local companies.

long-term savingWe are also in discussions with government

about possible ways to grow long-term savings through life insurance.

The insurance industry remains committed to ensuring that insurance is part and parcel of the government framework to go beyond the mandatory social protections such as Workers Compensation Insurance and Motor Third Party insurance to include insurance as an active part of the governments’ disaster and risk manage-ment strategy, for example by providing insur-ance products that are suited to the areas prone to weather-related disasters.

Miriam Magala is the chief executive officer of uganda Insurers association.

The Uganda Insurers Association hopes to grow insurance penetration from currently less than 1 per cent to 3 per cent over the next 10 years. Miriam Magala writes about the future of this industry.

bright days ahead for insurance sector

“Our reach is only as good as our innovations and distribution capabilities. In addition to these, our claims process will be key in delivering satisfactory services to our clients,”

MIRIAM MAgALA, CEo oF UgANdA INsURERs AssoCIAtIoN



agriculture

Agriculture is one of the most important sectors of Uganda, directly contribut-

ing 23 per cent of the national Gross Domestic Product (GDP) in 2014 ac-cording to the sector budget frame-work 2017/2018.

It is a major source of exports cur-rently at $1.3b (Shs4.5 trillion).

About 80 per cent of all households in Uganda derive their livelihood from agriculture according to the 2014 National Population and Hous-ing Census conducted by Uganda Bu-reau of Statistics.

However, according to the 2016/2017 budget speech by the Fi-nance minister Matia Kasaija, growth in agricultural output slowed to 1.3 per cent compared to 2.8 per cent in the previous year. The drop in output was attributed to “unusually pro-longed droughts.”

ChallengesFarmers, who are majorly small

holders, operate in risky times be-cause the sector heavily depends on rainfall. But climate patterns are un-predictable today, leaving farmers in a huge loss.

Disease causing pests have killed animals and pests such as the Fall Army Worm have dried up crops. Farmers’ challenges stretch over to theft; land conflicts that have left their farms destroyed and limited access to credit especially for rural farmers who abundantly contribute to the national food basket.

Hopes of raising Uganda’s eco-nomic growth lie in increasing pro-duction and productivity in agricul-ture and government says rolling out the Agricultural Insurance scheme across the country can salvage the situation.

The 2014 National Population and

Housing Census indicates that nearly 75 per cent of agricultural households are engaged in crop growing, while 58 per cent involved in Livestock farm-ing.

SubsidyGovernment has provided a Shs5b

premium subsidy in the financial year 2017/2018 and an 18 per cent value added tax waiver on agricultural in-surance products to make it afford-able for more farmers.

The scheme subsidises agriculture

insurance premiums for both small and large-scale farmers. It ensures that Ugandan farmers are mainly protected against the impact of pro-duction risks since they have access to an adequate insurance cover that enables them to remain in business.

Besides farmers who directly buy agricultural insurance, according to the Agro Consortium, the premium subsidy is extended to farmers that access loans through financial insti-tutions and this scheme acts as a cat-alyst to access to credit since farmers’ loans are protected from the effects of losses of their crops or livestock on their overall income that season.

The insurance policy provides cover against physical loss or damage to growing crops by uncontrollable pests, diseases, drought or fire. It also provides cover for death of animals as a result of fire, lightening, floods or diseases.

ContributionGovernment currently contributes

30 per cent to large scale farmers’ premiums and 50 per cent to small scale farmers’ premiums.

Statistics from the consortium in-dicate that so far, the amount of in-surance cover accorded to farmers is Shs72.5b.

Unfortunately, demand is still low because of a slow sensitisation drive.

About 23,000 farmers, majority of whom are small scale farmers have taken on the scheme. However, the target was to have 50,000 farmers on board by the end of July this year.

“Sensitisation is our challenge ba-sically because we lack the kind of resources we need to do mass aware-ness. What we have done so far has been funded by the government but it is not enough,” Agro Consortium technical manager Daka Muntaradzi said this year in June. In addition, the consortium will not be able to meet its target because of delays in imple-menting the scheme.

Farmers’ viewsRobert Semwogerere has been a

commercial farmer for 12 years in Nakawuka, Wakiso District. He grows bananas, coffee, vegetables, has fish ponds and rears cattle, pigs among other things. But he has not been able to follow up on the insurance scheme. He has reservations about the imple-mentation of the scheme and worries that small farmers like him cannot benefit, a story he says is similar to most farmers.

“You find that the process of ac-cessing that money is so skewed or difficult that the only people who can get that money are very big farmers who talk about mechanisation,” he says.

Mr Semwogerere says he will give it a thought if the current system im-proves.

“I need to see those people who have benefited from it because you put your effort in something hoping that it will work and at the end of the day, you lose out,” he explains.

luweero District agriculture officer Sarah Namubiru shows the damage caused by strange caterpillars that invaded maize gardens in the district recently. Disease causing pests have killed animals and pests such as the Fall army Worm have dried up crops. PHOTO BY DAN WANDERA

What is required for agricultural insurance to take off

Government introduced the Uganda Insurance Agriculture Scheme for both small and large scale farmers as well as those in high risk areas. eronie kamukama shares what it will take for the scheme to work.

5bq

aMoUNt oF MoNeY (IN UGaNDa SHIllINGS)

tHat GoVerNMeNt HaS proVIDeD aS a preMIUM

SUbSIDY IN tHe FINaNcIal Year 2017/2018

source: Ministry of Finance

hOW iT Will WORK

Partnerships. Former minister for Agriculture Victoria Sekitoleko says institutions financing agriculture need to work with insurance providers if the sector is to register growth.

“This year, government removed tax from insurance and this has made it more affordable. But many farmers are not aware. That is why financiers should encourage their customers to take it up,” she says.

Ms Sekitoleko also notes that agricultural insurance might not quickly drive production but will cultivate confidence within the agribusiness sector.

“Agriculture financiers are afraid of losing their money. So once farmers are insured, more money will go in. Farmers who are afraid of borrowing in case they mortgage their property and lose it, will have confidence and borrow knowing they are insured.”

Awareness. Mr Semwogerere says there is need for aggressive awareness. “When this information is moving, it moves slowly and sometimes to target people and others are left out. Also, Shs5b is small money for every farmer to be part of it. But even if it was big, the way it has been popularised leaves a lot to be desired,” he says.

Appealing products. The chief executive officer of Uganda National Farmers Federation Augustine Mwendya says the scheme is good for promoting agricultural production and will work if insurance products are appealing. He argues that the agricultural insurance will be more sustainable when the products are good, directly solve farmers’ problems through compensation, making it possible for them to remain in business.

“Premiums should not be very high and should address the areas that make it difficult for farmers such as pests,” Mr Mwendya says.

16.5x1proSpa


tuesday OctOber 17, 2017 insurance. 13advert

UaIb

performance Daily Monitorwww.monitor.co.ug


bY ISMaIl MUSa laDU [email protected]

Insurance penetration is still low because there is only so much that industry players

can do about it, sector stakeholders have said.

According to insurance industry regulator and industry analysts, insurance penetration of less than one per cent (0.63-0.8) is a reflection of how the economy is fairing.

“Insurance does not work in isolation,” the vice chairperson of the parliamentary committee on national committee, Mr Lawrence Bategeka, said when contacted last week.

The economist and sector policy analyst further argued: “Insurance responds to the economy and not the other way round.”

To put it into perspective, he explains that insurance is part of the financial sector that can only thrive

in a vibrant economy. In other words, the structure of the economy defines the status of insurance in the country.

insurance and economyMr Bategeka’s argument is

reinforced by Insurance Regulatory Authority of Uganda’s (IRA) annual report which says the performance of insurance sector is linked to the performance of the economy as a whole.

“The decelerated growth of 3.6 per cent posted in 2016 is largely attributed to the difficult economic conditions that our economy has undergone,” reads the IRA report in part.

According to Into Africa, a publication from Capital Markets in Africa, prior to 2012, the industry grew on average 18 to 20 per cent and since then, it has grown on average 11 per cent.

The publication attributes the

decline in performance to the tax policy which it describes as slightly less positive towards the insurance sector.

“We are currently the third most taxed industry in Uganda following beverages (alcohol) and telecommunication having to bear, among others, a stamp duty of Shs35,000 ($ 9.7) which is seven times what other industries pay in the same duty.

The sector is also burdened with Value Added Tax on Insurance services, With Holding Tax on Reinsurance Services and a training levy.

Although government has

reduced the stamp duty on micro insurance products from Shs35,000 ($9.7) to Shs15,000, ($4.2) which is an improvement, micro products still remains costly for the ordinary Ugandan.

Current outlookWorld Bank projects the rate of

growth for the Ugandan economy to accelerate to 5.9 per cent in FY 2016/17 as short-term domestic uncertainties retreat.

With a supportive macro economy, relatively better progress is expected in before the end of this year.

This will be driven by the introduction of Bancassurance as

a new distribution channel which involves selling of insurance through banks.

“It is expected that bancassurance will promote the growth of the sector due to the vast bank branch network in the country and the customer base of the banks,” reads the IRA statement.

According to IRA enforcement of compulsory insurance such as the Workers Compensation Insurance cover is a move towards the right direction for the sector.

The Mandatory Motor Vehicle Insurance Bill, which proposes that all vehicles including government vehicles to have mandatory insurance would according to the industry regulator go a long-way in promoting market development.

Technological innovations in products distribution, enforcing the provisions of the new Insurance Act 2017 which stipulates that all local risks and persons including imports shall be insured by companies licensed by the Authority, could turn around the fortunes of the nascent industry.

With the proposed National

Some residents of Jukia Hill look at a truck that overturned recently, killing three people on spot. according to Uganda Insurers association, the industry expects to register an increase in premiums due to motor insurance. PHOTO BY PATRICK OKABA

0.8%

INSUraNce peNetratIoN leVel IN UGaNDa

Is Uganda’s insurance sector at crossroads?

According to insurance industry data, in the year 2016, the gross premium underwritten by the insurance industry increased from Shs612 billion in 2015 to Shs634 billion in 2016, representing a 3.6 per cent growth.The gross claims paid for both life and Non-life insurance (including

HMOs) has increased from Shs213b in 2015 to Shs259b in 2016. This represents a 21.5 per cent growth of claims paid out.The Insurers’ (including HMOs) Net Asset base (that is Assets less Liabilities) has also increased from Shs373 billion in 2015 (Shs373 billion) to Shs407 billion in 2016,

representing a growth of 9.3 per cent. The sustained growth of the insurers’ asset base highlights the growing strength of companies to handle insurable risks locally and provide adequate protection to the insuring public.

Performance of insurance industry

At less than one per cent penetration, Uganda’s insurance industry has been labeled stagnant by some experts. Daily Monitor’s Ismail Musa ladu analyses why this sector is growing at this slow pace and what is required to boost it.



performance

Health Insurance Scheme underway, the sector could take off in a way that was not anticipated before.

As a result of these initiatives, the chief executive officer, Uganda Insurers Association, Ms Miriam Magala projected an average of five per cent increase in insurance premiums for Motor, Agriculture and Marine Insurance in the financial year 2017/18.

She said: “Our tentative performance results for the first half of 2017 indicate an overall 12 per growth in gross premium, an early boost to the initiatives under our 10 Market Growth and Development Plan.

She continued: “Over the same period, the amount in claims paid increased by three per cent- the industry on average pays Shs120b annually in claims.”

The insurance association leadership affirms the critical role that insurance plays in growing the country’s economy.

The association is engaging with the relevant government ministries, departments and agencies to ensure that the commitments made are enforced.

The industry apex body has further developed a Market Growth Plan which intends to grow insurance penetration from currently less

than one per cent to three per cent over the next 10 years - by among others, addressing knowledge gaps through increased awareness and sensitisation on insurance, leveraging on technology, lobbying and advocacy and skills development.

Not all is rosyThe impact of uncertainties,

resulting from the elections, on the economy in the first half of 2016 had an impact on the industry.

According to World Bank, “the electoral cycle held back economic activity, as would be expected. Over the first half of the year, economic indicators were downbeat– suggesting much lower aggregate demand than anticipated”.

There was depreciation of the shilling and high interest rates on loans which created a slow-down in investment; thus, affecting growth of the insurance industry.

The subdued growth of Uganda’s economy arising from, among other things, slowed growth in Uganda’s major trading export partners (Europe, China, and S. Sudan).

The fresh crisis (in July, 2016) in South Sudan, one of Uganda’s biggest export markets meant that estimated weekly earnings of $8m (Shs28b) from business could not be realised.

In regard to public spending,

government released funds but actual implementation of projects remained low.

The industry regulators statement also stated that decline in agriculture due to the prolonged drought resulting from the effects of climate change and environmental degradation hurt the economy which in turn had an impact on the industry.

However, the silver lining according to IRA, was notable growth in the life segment owing to increased consumer confidence in the sector resulting from enhanced regulatory and supervisory regime (improved policy wording, and complaints redress mechanisms, claims guidelines).

police Fire brigade put out fire which caught offices of the ministry of Health in Wandegeya this year. PHOTO BY STEPHEN OTAGE

Market share by provisional Gross premium 2016 (combined)Jubilee 19.71UAP general 14.04Liberty life 6.75AIG 5.48Britam 5.24UAP life 5.18Lion 5ICEA life 3.94Goldstar 3.9Sanlam life 3.65ICEA G 3.44Sanlam G 2.97Jubilee life 2.52Phoenix 2.51APA insurance 2.27SWICO 2.27NIC G 2.2EA Underwriters 1.89Transafrica 1.49Excel 1.44Alliance 1.07PAX 0.74FICO 0.65CIC general 0.52Prudential 0.38NIC life 0.25NOVA 0.23Rio 0.19

In 2006 Uganda

DEVElOPMENTS

oil

Legislation

2006tHe Year IN WHIcH

Uganda is looking to tap into Equatorial Guinea’s experience of oil production, in order to build its own capacity before oil production starts.

Speaking at the Joint Oil and Gas Convention and Regional Logistics Expo at the Kampala Serena Hotel, on Thursday, country’s President Teodoro Obiang Nguema Mbasogo, who wrapped up his visit to Uganda shorty after speaking at the conference, said they had agreed with President Museveni of Uganda on areas of corporations especially in the petroleum sector.

Equatorial Guinea which produces 300,000 barrels per day has been an oil producing country for the last 20 years. During bilateral talks between heads of state of the two countries on Wednesday night, Uganda’s Energy Minister, Ms Irene Muloni signed an MoU for cooperation in oil and gas with Equatorial Guinea’s minister Obiang Lima.

Mr Nguema said as Uganda proceeded with production cycle, there were important issues the country needed to address in order to maximise benefits.

In the previous financial year budget speech, the Insurance Act 2017 was assented to by President Yoweri Museveni to strengthen the stability of the financial sector.

The 2004 Financial Institutions Act was also passed to enhance market discipline. The partnerships between banks and insurance companies through Bancassurance will result in greater financial deepening and integration.

Government earmarked Shs5 billion to continue implementing the Uganda Agriculture Insurance Scheme as a pilot, to further subsidise agriculture insurance premiums for both small and large scale farmers to guarantee the returns expected from crop and livestock farming. The scheme will cover all regions of the country focusing on strategic crops and animals.

Compared to other economies in the region, Uganda only beats Burundi and South Sudan, two neighbouring countries currently struggling to hold from the centre, thanks to the civil unrests there.

Kenya, after rebasing has close to three per cent insurance uptake and Tanzania comes second with two per cent penetration then Rwanda with about 1 per cent.

Uganda takes the fourth place in the region with about 0.8 per cent.

The overall average is 1.5 per cent penetration in East Africa, implying that there is plenty of opportunity to invest in the sector.

DEVElOPMENTS

Insurance laws

Agriculture insurance

Regional standing

Shs5 billionaVeraGe aMoUNt oF MoNeY tHat GoVerNMeNt HaS

earMarkeD For aGrIcUltUre INSUraNce

15,000StaMp DUtY (IN UGaNDa

SHIllINGS) oN MIcro INSUraNce proDUctS

1.5%aVeraGe

perceNtaGe peNetratIoN oF

INSUraNce IN eaSt aFrIca

Fire and rescue service officials put out a fire that razed crest Foam mattress factory in Ntinda. according to insurance industry data, in the year 2016, the gross premium underwritten by the insurance industry increased from Shs612 billion in 2015 to Shs634 billion in 2016. PHOTO BY STEPHEN OTAGE

SOURCE: UGANDA INSURERS ASSOCIATION

micro-insurance Daily Monitorwww.monitor.co.ug


Though the formal insurance us-age statistics for both the highest and lowest quartiles are nothing

to write home about, the poorest are the hardest hit when risks emerge.

The most prevalent risks across all income levels are the risk of illness and death of a family member/relative.

According to the 2013 FinScope Survey, five in every 10 adults face the risk of ill-ness while two in every 10 adults face the risk of death of a family member or rela-tive.

Despite facing these risks, only two out of every 100 adults in Uganda have an in-surance policy from a regulated insurance company.

Formal insurance Formal insurance usage has remained

highest among the top wealth quartile where seven out of 100 adults have formal insurance and its usage is lowest among the lowest wealth quartile where almost no one (0.8 per cent) out of 100 adults has formal insurance.

It is against this background that au-thorities are coming up with measures to embrace the low income earners who are

the majority in Uganda through micro-insurance.

Micro-insurance addresses the insur-ance dilemma for the poor whose risk-coping mechanisms outside any form of insurance threaten to perpetually keep them in poverty.

Status of micro-insuranceIt is estimated that there are now 500

million micro-insurance clients in the developing world arising out of the in-creased interest of governments and in-surance companies to increase access of the poor to formal insurance.

“Asia leads the pack in the provision of micro-insurance with the continent accounting for 70 per cent of known micro-insurance schemes in the world,” Mr Joseph Lutwama, a policy, legal and regulatory specialist at Financial Sector Deepening Uganda, shares.

According to a 2015 report on the Land-scape of Micro-Insurance in Africa, mi-cro-insurance accounted for 1.1 per cent of the total insurance premiums in Africa in 2014. South Africa is the leading mar-ket in micro-insurance in Africa.

Micro-insurance can be found in all

business lines, including life, accident and disability, health, property and agricul-ture (crop and livestock).

“Any risk relevant to low income house-holds can be covered by micro-insurance,” Mr Lutwama shares.

is uganda ready formicro-insurance?

Insurance Regulatory Authority (IRA) Publicist Mariam Nalunkuuma agrees that Uganda is ready to embrace micro-insurance.

To take this forward, IRA issued guide-lines that will be used to encourage the uptake of micro-insurance.

“We realised that majority of Ugan-dans are low income earners –a bracket which current products available on the market don’t cater for. We believe tapping into the low income earners will increase penetration levels in the country,” Ms Nalunkuuma says.

She adds that the market is gradually opening up for the low income earners where products have been developed. A case in point is the Boda Boda Insurance covers which allows the riders to save as low as Shs10,000.

Additionally, aYo is currently offer-ing micro insurance in partnership with Metropolitan and MTN through the MTN Mobile Money menu.

Mr Joel Muhumuza, Fsd Uganda’s part-ner support specialist, shares that never-theless many insurer parent companies and fellow subsidiaries in other markets

have micro-insurance. “Uganda still has many insurance com-

panies providing traditional products to the low income sector or now planning on bundling the services with bank services through the recently approved bancas-surance,” Mr Muhumuza added.

However, Mr Muhumuza says more work needs to be done especially on sen-sitisation.

“Right now, most insurance is provided through employers or obtained as a man-datory requirement from government for motor third party,” he noted.

However, with the success of financial products such as Mokash and reasonable uptake of mass insurance products pro-vided by the likes of aYo in partnership with MTN, there’s room for people to start making headway.

Now is the time to create a market by first understanding the customer needs and then bringing them services that can meet those needs.

The Uganda Insurers Association sees micro insurance as the way to grow the market from the 0.8 per cent penetration it is at now.

ChallengesAs pointed out by Cenfri and FSD net-

work, the biggest challenges in delivering micro insurance are

Mr Muhumuza shares that lack of infor-mation to consumers is one bggest chal-lenge micro-insurance is facing.

“The people most in need of these ser-vices are often not well segmented with many insurers and financial service pro-viders knowing very little of their actual financial behaviors and mechanisms for saving and insuring themselves,” he said.

This can easily lead to inappropriate products being pitched.

Furthermore-inadequate access to consumers -delivering the service is expensive if sales people have to travel constantly to provide training, overhead costs of regional centres.

The mobile phone seems the easiest way to go but mobile phone usage for insurance still requires a lot of sensitisa-tion

Different and new consumer needs in which each segment of the population will have varied needs is a challenge.

This continues also along demographic lines-farmers may require crop insurance with seasonal premium payments while a young mother may need micro insurance to cover prenatal treatments and a young boda boda rider may just need a broken bone policy he can pay for from his mobile money.

Customers inexperienced with formal financial services are still very low and many barriers such as financial literacy and numeracy may render it difficult for customers to take on micro insurance.

“Unlike savings and credit which have relatively immediate benefit, micro insur-ance requires discipline and long term planning. Also the methodology of mak-ing claims needs to be easier so as not to compound issues for low income earners trying to get a payout,” Mr Muhumuza shared.

What insurers should doIn order to appeal to a new segment,

insurers will have to go beyond tradi-tional business models to reach people who have seasonal incomes, those who are susceptible to economic shocks and need to make small, irregular payments through a channel that they understand.

“This for now appears to be over mo-bile but some hybrid of mobile and in person may be necessary,” Mr Muhumuza added.

Micro-insurance is a kind of financial service package for poor people, covering their risks by paying a small amount of premium on regular basis. Daily Monitor’s Dorothy Nakaweesi engages experts who argue on how insurers should include the poor among the insured.

Micro-insurance: a case for low income earners

a woman and her children in a slum. Micro-insurance addresses the insurance dilemma for the poor whose risk-coping mechanisms outside any form of insurance threaten to keep them in poverty. PHOTO BY ABUBAKER LUB0WA

PERCENTAgE OF ADUlTS WHO HAvE AN INSURANCE POlICY FROm A REgUlATED INSURANCE COmPANY

PERCENTAgE OF ADUlTS WITH FORmAl INSURANCE

2%

0.8%

MiCRO iNSuRANCE

RISKS



bancassurance

Nova 1/2

With insurance penetration stuck at less than one per cent in Uganda, the

partnership between insurance and banking is expected to deepen uptake by substantial margins, according to industry players.

Already the two—insurance and banking, belong to the same financial sector. Therefore, this collaboration is deemed beneficial to both indus-tries by their respective regulators and sector analysts.

With the Amended Financial In-stitutions Act allowing operation of Bancassurance there is no better time for both industries to harness each other’s strength than now.

What is it?Bancassurance is an arrangement

in which a bank and an insurance

company form a partnership so that the insurance company can sell its products to the bank’s client base. In short, Bancassurance is about banks selling insurance products on behalf of insurance firms.

This partnership can help insur-ance firms to deepen penetration without much hassle.

In an earlier interview with the chief executive officer of the In-surance Regulatory Authority of Uganda, Mr Ibrahim Kaddunabbi Lubega, it emerged that selling prod-ucts through banks offers huge op-portunities for the industry. With Bancassuarance, useful platforms that can reach an expanded market at relatively lower costs will be in-troduced. This explains why the In-surance Institute of Uganda (IIU) is focusing on building capacity in new areas of insurance including Bancas-surance, Islamic insurance, pensions and micro-insurance to equip players with the necessary skills.

This follows Parliament’s approval of the Financial Institutions Amend-ment Act early last year, to among others, allow for Bancassurance and takaful – Islamic insurance.

Once it is rolled out, Uganda Insur-ers Association leadership and the industry regulator hope to ride on

the back of banks whose presence is wider, thanks to their branch network coverage, to boost insurance penetra-tion from the current 0.8 per cent to about three per cent in the next 10 years.

According to IIU chief executive officer Saul Sseremba, the move to prepare the industry to harness the

potential of the emerging areas in in-surance is already underway.

Insurance Institute of Uganda, the training body of the insurance industry in Uganda, is charged with developing and conducting training activities for its membership.

According to the Africa Insurance Barometer 2017, there is still room for

growth on the continent because of the low penetration and investment opportunities.

Rolling out of Bancassuarance is one such initiative that if well im-plemented, will increase the much-needed insurance uptake in the coun-try.

By end of 2017, commercial banks will be able to work as agents, sell-ing insurance products known as Bancassurance, with estimates from the barometer indicating that it is the single most popular insurance distribution channel followed by the mobile phone.

Pros and consAccording to Ghilimei Elena, who

has written widely about the sector, in her paper, titled: The benefits of Bancassuarance, noted that success-ful Bancasurance models involve selling simplified products over the counter to customers who make on-the-spot decisions.

She argued that Bancassurance products tend to complement exist-ing bank products, which can in turn lead to additional selling opportuni-ties.

Worldwide, she said, insurers have been successfully leveraging Ban-cassurance to gain a foothold in markets with low insurance pen-etration and a limited variety of dis-tribution channels.

“The ability to integrate banking and insurance can help to lower costs and maximise synergies,” she says in her paper.

The economics behind integrated operations, however, could be chal-lenged with changing times.

Bancassurance, a package of banking and insurance service under one roof, is one of the avenues insurance companies are counting on to widen their footprint, Ismail Musa ladu writes.

Insurers eye bancassuarance to deepen insurance uptake

an illustration of an agent attending to a customer. In bancassurance, insurance companies allow banks to sell insurance products to their customers. ILLUSTRATION BY DANNY BARONGO


Daily Monitorwww.monitor.co.uglife insurance

an elder holds a baby’s feet. to safeguard the future of your dependents, you can buy insurance such that in case you die, the insurance company pays a sum to provide a good life for the dependents left behind. FILE PHOTO

What drives growth of life insurance

When you begin existing, you are created with an asset, that asset being life.

Once you are able to understand, you get a good education, a good job later, acquire property and get a family.

According to insurers, it is a risk for one to die at an early age and living longer than expected, on the other hand, becomes risky if you do not have much to take you through the rest of your life.

Therefore, to safeguard the future of your dependents, one can buy insurance and in case one dies, the insurance company pays a sum to provide a good life for dependents left behind. This is what many have begun to know as life insurance. Its products can also be used to save for long-term plans.

PremiumsLife insurance in Uganda is reach-

ing a new peak, with Shs133b gross premiums in 2016, representing a 3.6 per cent growth from 2015.

Life insurance is emerging as the

fastest developing segment, growing at 30 per cent every year according to Uganda Insurers Association chief executive officer Miriam Magala.

It is about 22 per cent of the indus-try figures, unlike five years ago, says Mr Nicholas Lutakome, head group risk at Sanlam Life Insurance Lim-ited.

Drawing on a number of examples on the sector’s growth, Mr Lutakome explains the state of life insurance five years ago.

“It was about 10 per cent five years ago. Life insurance was a department in insurance companies so you would find a lot of companies doing general insurance as a bigger pool because it has some compulsory covers in it,” Mr Lutakome explains.

Today, Insurance Regulatory Au-thority says the remarkable growth in the life segment considering the difficult economic times is attrib-uted to separation of the previously merged companies.

In an interview with Daily Moni-tor in June, Mr Jackson Muli, the chief executive officer of ICEA Life Assurance, said: “The demerger was a requirement by the regulator that businesses needed to focus on their core lines of business. It was a focus for the businesses also to have a clear strategy on how to grow individu-ally. The separation has seen a lot of growth.”

Mr Lutakome says the number of insured lives is growing amidst a low penetration that does not tally with the growing population. For instance, Sanlam alone has so far insured more

than 60,000 lives while the industry has about 100,000 lives insured.

Insurers also trace the growth that the life insurance sector is enjoying to the growing uncertainty within the public.

In March this year, Mr Arjun Mallik, the chief executive officer Prudential Assurance, said policy holders were realising that they need insurance cover for their lives to guarantee in-come in the future.

TrendsSo far, the most important trend in

life insurance is growth of individual life products. Mr Muli says this is because for individual life products, people make decisions on their own and if they have some income, they look at it as savings once they put it into a policy, expecting a return on a future date.

On a global level, most life policies are bought by people who are part of

a family and are planning for their fu-ture. But Mr Lutakome says Uganda does not have a huge proportion of the population within this bracket.

The 2014 census report shows that 23 per cent are youth (18-30) while 55 per cent are below 18 years. He says life insurers have a target of 6 mil-lion people in Uganda but have not done 10 per cent of this target as an industry.

ChallengesInsurers say the growth is good so

far despite a few challenges emanat-ing from acceptance of life insurance. Different perceptions such as the high cost of insurance are also hurt-ing the sector.

“Some people do not trust and that is what we have been fighting to show that insurance pays. If people could access and know the benefits of insurance, growth would be better,” Mr Muli says.

What insurers are doingInsurers are focusing on entry level

market. “You may not see us selling a lot to the high network people who are earning over Shs10m, we would want to sell more to that person who earns between Shs300,000 and Shs1m. These are the ones who badly need insurance since they have a lot of uncertainty about their future,” Mr Lutakome says.

Mr Muli says the use of agents on the ground is driving business. Insur-ers are also spending millions of shil-lings on advertising to educate the public, with the aim of growing life insurance numbers. In turn, this has given a boost to companies such as ICEA that saw a 27 per cent growth to achieve Shs23b in premium in 2016.

133bq

GroSS preMIUMS oF lIFe INSUraNce IN UGaNDa IN

2016source: Uganda Insurers Association annual

report 2016

POTENTiAl

Insurance Regulatory Authority says life insurance is expected to grow even higher in the medium term as the middle income class expands.

Mr Lutakome says it has more potential to grow because Uganda has more people than property. So the market is big. He says in the next seven years, life insurance will be the biggest in the sector.

“We shall have more premium income than any segment of the business and will be employing more people. For as long as people start planning for the future, life insurance will be one of those things they have to put money in through banks as insurers provide financial solutions,” he says.

Ms Magala says insurers will have to continue educating the public on life insurance particularly as a savings mechanism and its relevance after retirement since it reduces dependency ratios.

Mr Muli is counting on government to give insurance relief so that the money policy holders contribute to their policies is not subjected to tax.

“People would be more appreciative and take it on positively,” Mr Muli says.

Life insurance is emerging as the fastest developing segment in the sector, growing at 30 per cent every year. eronie kamukama explores the major growth drivers of this segment.


Daily Monitorwww.monitor.co.uginsurance reforms

10x6 bpI

The new law has empow-ered the Authority to set standards, implement

and enforce the law; harmonise insurance laws within the East African region; provide for cor-porate governance principles and practices. It has also em-bedded best practice provisions for Risk Based Supervision as well providing for fulfilling the requirements for Anti-money laundering and Terrorism fi-nancing. The previous insurance law had not incorporated the recommendations relating to the anti-money laundering and counter financing of terrorism, which was exposing Uganda for blacklisting by the International community.

In the Insurance Act 2017, there shall be increased representa-tion to the Insurance Regulatory Authority of Uganda (IRA) Board with additional members from the Uganda Retirement Benefits Authority and Capital Markets Authority following the cross-cutting regulatory requirements of the players.

Perpetual licensing Under the new law, insurers

will no longer have to pay for annual licences but the issued license shall remain in force until it is suspended, varied or revoked by the IRA. This marked the end of an era where insur-ance companies have to annu-ally renew their licences to do business.

On the other hand, intermedi-aries such as insurance brokers, loss assessors, among others, shall be issued with licences for two years.

Control functionsThe new law sets in place

strengthening of Risk manage-ment and internal control mea-sures. Whereas the previous law was not providing for ad-equate administrative controls, the new law has reinforced the governance and management framework apportioning re-sponsibilities to shareholders, directors, senior management and key persons in the control function. Specifically, every in-surer and Health Membership Organisations shall be required to establish and maintain; a risk management function, a com-pliance function; an actuarial function; an internal audit func-tion and any other as shall be determined by the Authority.

To improve the supervisory review and reporting, the new law requires that records shall be kept for 10 years after the end of financial year to which they relate.

‘Cash and Carry’The Act introduces Cash and

Carry measure for mainly insur-ance brokers and agents. This

development, when fully imple-mented, will improve liquidity and ease cash flow of insurance companies. Like in many other

jurisdictions, the ‘Cash & Carry’ measure will enable insurers re-think their strategies by offering creative solutions for premium payment to their customers and customise their client needs.

In addition, the new reform will no longer allow insurance companies to sell insurance policies on credit to its custom-ers. The ‘no premium no cover’ policy will enable insurers to collect premiums upfront before providing insurance cover for any class of insurance business. Previously, some unscrupulous people would move from one insurance company to another, to take insurance cover on credit and never pay.

SupervisionThe previous law which was

compliance based involved checking for and enforcing ob-servance with set rules in form

of legislation, regulations or policies which were mainly ap-plicable while licensing an entity. However, the new Act shall shift to Risk-Based Supervision (RBS) which is gradually becoming the dominant approach to regula-tory supervision of financial institutions and sectors around the world.

This approach with formally structured systems assesses risks within the financial system, giving priority to the resolution of such risks. To protect the in-terests of policyholders, the Act through RBS regulations will, for example, require companies to allocate enough resources to cover the risks undertaken.

ConclusionThe reforms highlighted

among others, are aimed at strengthening the insurance industry to play its role in the economy’s development.

Mariam Nalunkuuma is the communications officer of Insurance regulatory authority of uganda.

In May this year, President Yoweri Museveni assented to the Insurance Act 2017, paving way for major reforms. Mariam Nalunkuuma provides some highlights in the new law.

reforms in new insurance law

an illustration of the negative attitude towards insurance. Some people think insurance companies do not pay claims and avoid it altogether. ILLUSTRATION BY DANNY BARONGO

Wenreco 10x3“The new law has embedded best practice provisions for Risk Based Supervision as well providing for fulfilling the requirements for Anti-money laundering and Terrorism financing,”

MARIAM NALUNKUUMA, CoMMUNICAtIoNs oFFICER INsURANCE REgULAtoRy AUthoRIty oF UgANdA

a police official explains how a taxi caught fire. the new law will no longer allow insurance companies to sell insurance policies on credit to their customers. FILE PHOTO


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