With bancassurance expected to boost the uptake of insurance services in the country, players have been urged to align the insurance and banking Acts to ensure success of the product.
Bancassurance involves a bank providing outlets through its branch network for the sale of insurance products, especially life insurance and pension products to clients.
Speaking at stakeholder consultative meeting last week, Mr Sundresan Moodley, head of Bancassurance, Rest of Africa for Liberty Insurance, said despite contributing immensely to insurance companies’ revenues in markets where the model operates, bancassurance has been a disaster in others because of a variance in laws regulating the two sectors.
“The insurance regulator doesn’t want to report to the banks’ regulator yet the banks regulator also doesn’t want to report to the insurance regulator. So aligning the Acts to create a mutual ground for the product will be necessary,” Mr Moodley said.
The introduction of the bancassurance model in Uganda still awaits amendment of the Financial Institutions Act, which is currently before Parliament.
Commenting about aligning the insurance and banking legislations, Mr Chris Kananura, the insurance manager, Insurance Regulatory Authority, said the regulator did its part by removing restrictive clauses and what is remaining is for the banking regulator to play its part.
“The Insurance Act initially had clauses that prohibited banks from selling insurance products but they were removed and we expect that the same will be done to the Financial Institutions Act to remove stringent provisions and pave way for bancassurance,” he said.
Risks and claims
Although insurance products will be sold through the banking network, Ms Miriam Magala, the Uganda Insurers’ Association chief executive officer said the risks and claims settlement will be borne by insurance companies.
Mr Joseph Almeida, the Liberty Life Uganda managing director said if operationalised, bancassurance is expected to boost insurance penetration through increased access to insurance products using the wide banks network as a new distribution channel.
Access to insurance services in the country has stagnated at about 0.6 per cent for the past five years, the lowest in the East African region mainly due to low awareness levels, limited outreach of insurance and lack of trust in the insurance industry among others.