Uganda insurers set target

East African Business Week

KAMPALA, Uganda – The insurance regulatory body has set its eyes at increasing the penetration to 1.3% by 2016, a figure which is still low as compared to other East African countries. 

The insurance industry is continuing to grow not only by number of service providers but also in revenues collected and market penetration. The Insurance Regulatory Authority of Uganda recently announced that there are 88 insurance firms that will do business in the year 2015 with seven new companies entering the market.

The regulators said that 30 insurance companies were licensed out of which 21 are non-life insurers, 08 life insurers and 01 reinsurance company.  The Authority also licensed 12 Health Membership Organizations, one reinsurance broker, 27 insurance brokerage firms and 18 Loss assessors/Adjustors. The Authority said they are still examining other insurers’ and agents’ applications to be considered when all the requirements have been fulfilled.

The increase in number of service providers brings competition into the market which has been registering minimal market penetration, the latest to be recorded being the increase from 0.66% to 0.85% in 2013. This means a levelled playing ground must be put in place by government by ensuring good policies and that laws are formulated. To achieve this, insurers are tasking government to address some of the pressing challenges the industry is currently facing.

Insurance service providers, among other things  are lobbying government to improve taxation environment and strict enforcement of section 3(2) of the Insurance Act  which requires the domestic insurance of all imports, goods and assets situated in Uganda and ships, aircraft or other vehicles registered in Uganda. The insurers also want stricter enforcement of the Workers Compensation Act, insurance of government and public assets and compulsory insurance of commercial buildings and markets (including construction risks). 

In an interview, Faith Ekudu, the Public Relations and Advocacy officer at Uganda Insurers Association noted that the industry has had to cope with two consequential taxes in a space of two years- the increase in stamp duty in July 2013 and the removal of the tax exemption in July 2014. She says these taxes makes insurance less attractive at a time they are struggling to promote insurance in the country.

The call for government to insure its assets is not a new one yet government’s response has been of a snail speed something that not the industry and caused government to lose huge amounts of money in cases when the risks occur. 

“The days of self-insurance are long gone. Government should no longer pass the cost of its self-insurance to the public and should instead insure its assets with licensed insurance companies. This will not only boost local capacity but ensure the appropriate application of risk management measure to afford the government the protection it needs in case of catastrophes,” Ekudu explained.

While the service providers wish list is mainly commercial the regulatory body, insurance regulatory authority of Uganda (IRA) has chosen to Innovativeness in product development, improving the industry image and reputation and call for the overhauling of the insurance Act. The communication officer at IRA Mariam Nalunkuuma says the regulators are encouraging players to come up with affordable initiatives that promote micro-insurance and agricultural insurance from the urban to the peri-urban communities.