Jubilee tops insurance charts again as insurance premiums grow

While speaking to the media, Kaddunabbi Lubega, the IRA boss, noted that gross sector premium underwritten hit Ugx 456.86bn in the year 2013, up 30.08% from Ugx 351.23bn in 2012.In addition to an improving economic scene, he noted that the public was embracing insurance a lot more nowadays thanks in part to improved publicity.  Lubega noted that insurers still had a lot to do in claims settlements despite a 17% growth in compensations.

The report shows that Jubilee insurance topped the insurance charts with gross, underwritten premiums of Ugx 83.4bn, up 2.43% from Ugx 81.5bn the year before in 2012. Jubilee also holds the largest market share at 23.75% though this is a drop from 26.03% of the market in the year 2012.

UAP took second spot with premiums underwritten worth Ugx 56bn, up 39%, the single largest growth for nonlife insurance companies.  AIG, Goldstar, Lion Assurance, ICEA, Phoenix, APA, SWICO, Excel, East African Underwriters, NIC, Britam, NIKO, Transafrica, FICO, PAX, Leeds, Rio and Nova followed respectively in the non-life category.

Liberty Life led the race in the life insurance category, gunning premiums worth Ugx 20.3bn, up 54% from Ugx 13bn a year before. The highest growth, however, was registered by Jubilee life with a whopping 101.68% jump to Ugx 5bn, from Ugx 2.49bn.

Sanlam had the second highest growth at 67% to register premiums worth Ugx 8.5bn, up from Ugx 5bn. Goldstar registered the third highest growth rate at 58.7% to Ugx 535m, up from Ugx 337m.

Britam, ICEA, UAP and NIC followed respectively by growth. Though total life premiums hit Ugx 55bn, from Ugx 38bn, Lubega noted that more needed to be done.

“In the financial year 2012/13, the economy grew at 5.8%, strong growth means increased private and public sector investment as well as consumption both of which are important sources of business for the insurance sector,” Lubega told reporters at the IRA offices.

At end of October 2013, Ugx 162bn had been borrowed from banks according to Bank of Uganda data, up from Ugx 148.2bn a year ago. Increased lending increases expenditure on insurance-related products and services.

Health Membership Organization (HMO) premiums hit Ugx 50bn with many turning a profit since they came under the IRA’s jurisdiction, only five out of a total ten HMOs have sent in their results.

Aggregate claims settled hit Ugx 90.7bn, from Ugx 77.9bn, registering a notable improvement in quantum and the process efficiency.

The report notes that AAR Health Services registered the highest premium collection at Ugx 22.5bn, followed by the International Air Ambulance (IAA) at Ugx 18.4bn, followed closely by St Catherine Clinic with Ugx 5.8bn, Kadic Health foundation with Ugx 2.7bn and International Medical Link at Ugx 578m.

“Improved levels of compliance with the existing laws and regulations and market discipline have resulted into greater transparency, disclosure and fair competition,” an IRA report notes.

Insurance, pensions sectors partner to grow informal reach

Humphrey Wanyama is an engineer. Though his earnings have barely improved since he was single and unattached, Wanyama now has to split his earnings between himself, his wife and his 10 children.

According to the Uganda Bureau of Statistics Household Survey data for the year 2005/2006, each woman has seven children in her lifetime and monthly average earnings are at Ugx 170,000.  Though incomes have gradually improved over the recent years, a significant number of Ugandans, especially those employed in the informal sector, shares Wanyama’s story.

Cognizant of this reality, the Uganda Association of Insurers (UIA) and the Uganda Retirement Benefits Regulatory Authority (URBRA) have joined hands to create low-cost financial products that will provide a form of investment and saving.

“Our biggest impediment to growth is the lack of financial products that offer wealth enhancement. There are practically no products that target the low income segments where people save Ugx 5,000 per month,” Joseph Almeida, the Liberty Life Assurance boss, said.

Almeida doubles as the chairman of the Life Assurance Committee of the Uganda Insurers Association. He made the comments at the 4th Annual UIA life agent of the year award. Almeida noted that all life insurance policies have to be affordable to the low-income Ugandans and that the policies must include an element of savings at the same time.

Sanlam Life Insurance’s Amos Osunu, won the life insurance agent of the year accolade. Miriam Magala, the UIA chief executive officer, noted that agents had played a significant role in growing industry premium collections.

The insurance sector recently launched a micro insurance product for the health, disability and funeral cover for a family of six children for as low as Ugx 121,000 annually. More such products are set to be rolled out.

Deepak Pandey, the UIA chairman, noted that the government should provide a tax incentive on savings products like is done internationally. He added that insurance sector premiums would benefit from the uplift in savings.

Uganda’s saving culture remains low at about 1.5% (Ugx 750bn) to the GDP at market price when compared to China at 38%, India 34.7%, and Turkey 19.5%.

 “We need insurance agents to be truthful and explain insurance products properly to all Ugandans they sell to. They should only promise what they can deliver; this will increase confidence in the sector,” Pandey said.

Turning to the pensions sector, Pandey noted that the soon-to-be passed Uganda Retirement Benefits Liberalization Bill should create a level playing field for all pensions sector firms and that it should subject insurance firms to double regulation.

“The pensions law should be flexible enough to be adjusted to meet the ever-changing market needs. The URBRA should have a training institute to develop key technical capacity to run the pensions sector efficiently,” Almeida said.

There are close to 18 million working Ugandans but only 0.5 million that are in the formal sector are covered by the National Social Security Fund (NSSF), liberalization of the sector is expected to open the way for creative new players to cover the informal sector.

In turn, insurance sector penetration is a dismal 0.66% of the GDP, necessitating new approaches like the use of local languages, mass public education and innovative premium collection methods to grow sector penetration. Collaboration between the insurance and pensions sector will have mutual benefits for both sectors.

Andrew Kasirye, the URBRA chairman, noted that the pensions and insurance sectors had the key responsibility of deepening the financial sector through reaching out to Uganda’s vast youth population under 30 years.

More than 70% of Uganda’s population is under 30 years. “A lot of insurance products complement the pensions sector. Collaboration between the two sectors is absolutely critical,” Kasirye said.

Moses Bekabye, the acting URBRA managing director, noted that the new pensions and retirement benefits liberalization bill seeks not just to bring in new players but to reform the entire sector to grow public confidence.

“It is hard to sustain economic growth using borrowed funds. When the pensions sector is reformed to allow even Ugandans in the informal to save, we will have a larger pool of private capital to fund development like the Asian Tigers did in the past,” he said.

March 20th, 2018 | by

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