The tough promise
And sure, like day follows night, after a short period, Chartis reverted to AIG. It was not easy to rebrand an icon. Apparently, AIG’s major clients in Asia particularly China were said to have had tough times pronouncing the word “Chartis.” In these times where the customer is a dictator, Chartis had to disappear.
A brand is not just a logo. It is about all the senses. AIG is said to have spent millions in this brand mess ups. In September 2016, the bad news arrived on our desk: that AIG is consolidating her operations and exiting markets with high cost of doing business or those whose contribution to gross profits were marginal. Unfortunately, AIG Uganda operations is one of them. According sources, this transition is expected to be effected within the next two years to mid-2019. The company will now be undertaking gradual business closure including terminating all contractual obligations. If you are a client of AIG and your policy is not terminated, may be it will be transferred to another insurer. You should not be alarmed.
Exit from markets is a normal business decision and AIG is doing just that. The big question is why is it tough to do insurance business in Uganda? How do we grow the economy if the big players continue to exit? Insurance is about selling the promise of peace of mind. Selling promises is a tough call. You need many people buying policies so that you pull so many people into one basket with hope that few, if any, will have their risks materialise. The fewer the claims, the better to the insurance company.
However, some policy holders collude with some staff and make claims for risks that did not materialise – fraudulent claims. This makes the cost of insurance very high. In Uganda, insurance fraud is said to be one of the major challenges to the sector.
Insurance also hates unfair playing field. Yet in Uganda, the field seems very unfair. It is reported that the loss of the large construction projects currently happening in Uganda could have been the breaking point for AIG – a global brand known for underwriting the major projects globally. Small clients have diverse needs and are expensive in the long run.
The insurance penetration in Uganda measured by the total premiums written divided by Gross Domestic Product (GDP) WP/GDP, has remained at below 1 per cent at just 0.85%. Insurance experts attribute this to low public awareness of the sector. Others to lack of innovation in the industry. The fact is insurance needs rethinking and repositioning. Mobile money’s rapid adoption and success has shown that if it is useful and innovative, it will succeed. In fact the public have to invest their own money to learn about mobile money and how it works. That is how a break-through business works: forces people to know it and therefore embrace it.
The insurance sales model, clear articulation of the benefits and success stories of insurance should be highlighted at all times. New mass products should come on board. Of course we do not expect an insurance cover for the risk of going without a meal!
Let the public feel incomplete unless they have that policy. Selling insurance will remain a hard sale. In this issue find special report on insurance analysis, including a Q & A with Geoffrey Kihuguru – an insurance expert.