Uganda’s insurance industry is challenged to make their products attractive to the younger population who are increasingly becoming a dominant spending power in the economy.
This, according to prominent Kampala lawyer David F Mpanga, will help drive insurance penetration beyond the current 0.8 percent where it has stagnated for long despite the many innovative initiatives by the companies and the Insurance Regulatory Authority (IRA).
Mpanga said there is more opportunity for growth in focusing on small and medium enterprises because these account for about 90 percent of the economy, employing the majority of Ugandans where most are young persons.
He, proposed for example, that whenever a property is being acquired, the seller should use the chance of interacting with the customer, to sensitise them about insurance by insuring the property before sale.
This was at the first Bancassurance Thought Leaders Forum under the theme: A Reflection on Insurance in Uganda: There is value in partnering with your financial institution for insurance services. It was organised by the Uganda Bankers Association (UBA) and the Insurance Regulatory Authority (IRA).
Bancassurance is an insurance platform which allows commercial banks to sell insurance products for different insurance companies, a method that was introduced in 2016/2017 to enhance the visibility of the insurance industry.
Ibrahim Kaddunabbi Lubega, the IRA Chief Executive Officer tipped the banks to gain more from Bancassurance than just the sale of insurance products, especially as the bank becomes a one-stop-shop for many services, hence becoming convenient for the customer.
This, he said, was how countries expanded their insurance penetration, with some having introduced Bancassurance more than 30 years ago.
Currently in Uganda, 19 out of the 23 commercial banks in the country have embraced the Bancassurance platform.
He, however, also noted the need for insurance companies to target younger persons.
“We remain open to discussion on what we can do better and also to tell the Bancassurance team at the Bankers Association that let’s have those challenges which would answer the Gen Zs requests so that we do not lock out anybody of what we do.”
Wilbrod Owor, the Executive Director UBA said the importance of Bancassurance cannot be underestimated because it has done a lot to grow the industry.
“In Uganda, bancassurance has driven industry improvements by offering new products and leveraging banks’ digital platforms to simplify insurance distribution.
To remain relevant, there’s a need to continue digitizing and simplifying insurance, especially for business owners who rely on it for protection.”
The Inaugural Bancassurance Forum, themed “A Reflection on Insurance in Uganda: The Value of Partnering with Your Financial Institution for Insurance Services,” provides an opportunity to evaluate the sector’s contributions, including successes and challenges.
It also aims to develop synergies around bancassurance as a distribution channel and address current bottlenecks, shaping the future of the platform in Uganda.
“As we fast approach the 10-year anniversary of bancassurance in Uganda, we are keen to avoid stagnating, but rather to play a similarly pivotal role that bancassurance has played in other markets,” Martha Aheebwa the Chairperson of the Bancassurance Technical Committee at UBA, said.
In many countries, Bancassurance is the leading channel through which the insurance insurance industry reaches the public. For example it accounts for 80 percent of the Gross Written Premium in Brazil.
In Uganda, the platform has helped in driving the industry towards an improved client proposition through new and improved products, all of which are leveraging on the digital platforms of the banks to simplify the distribution of insurance.
Aheebwa says there is need to continue to do much more not only to digitize but also to simplify insurance for the insuring Ugandan public.
“How can we show our relevance to the businessman or woman who has borrowed to start or grow their business, whose potential loss of stock threatens an entire value chain, whose potential incapacity-even temporary, threatens a livelihood and future for an extended family?,” she wondered.
Bancassurance in Uganda commenced in 2017 when one bank was given a license to begin implementing the provisions of the Financial Institutions (Amendment) Act 2016, and the passing of the Bancassurance Regulations in 2017.
The channel has since grown with 19 supervised financial institutions currently licensed by the Insurance Regulatory Authority.
Gross Written Premium grew from 83.34 billion shillings in 2020 to 142.7 in 2022 and more than 160 billion last year, which is about 10 percent of the total premium of 1.6 trillion shillings.
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