Build consumer trust to boost insurance industry, say experts
Posted Friday, February 22 2013 at 10:56
Cut costs. Insurers should decentralise claim settlement systems to reduce costs, especially for up-country customers.
Insurance players have been advised to promptly settle calims, decentralise claim settlement and communicate effectively from policy inception to build public trust in the industry.
Presenting a paper on ‘Consumer Trust in the Marketplace – Demand side analysis’ yesterday, Mr Protazio Sande, the Insurance Regulatory Authority (IRA) of Uganda assistant director, market research and development, said low public confidence in the insurance industry is affecting its growth.
“Insurance sales a service which is abstract in nature and without trust, the industry can’t grow. This makes customer trust a cornerstone of the insurance services industry,” Mr Sande said at a breakfast meeting in Kampala.
He added: “Insurance is a spectrum of protection and investment benefits to the insurer but is viewed as a black hole where cash flows in and no value flows out to the individual who is struggling to perceive insurance value and attempting to fulfil other demands.”
Many people are disappointed with the service quality of insurance firms in Uganda either due to failure to pay their claims on time or going through lengthy procedures.
The bad experiences have forced many to shun insurance; thus, the low penetration levels, now at 0.65 per cent, the lowest in East Africa.
Insurers were also advised to explain to customers the particulars of policies they sell to avoid creating false expectations and to decentralise claim settlement systems to reduce costs, especially for up-country customers.
However, the Statewide Insurance Company managing director Joseph Kiwanuka, said much as settling claims from upcountry branches would ensure prompt payments, it requires more time before it can be practised as it may fuel payment of fraudulent claims, posing challenges to insurance firms.
Ms Gugu Ngwenya, the First Insurance general manager, however, challenged IRA to grow the insurance sector, especially in the micro insurance market, to up penetration levels.
However, IRA executive director Ibrahim Kaddunabbi Lubega, said to achieve that, insurers need to develop cost-effective micro products that appeal to the market.