Insurance industry records marginal decline in growth

Mr Ibrahim Kaddunabbi Lubega, the chief executive officer of IRA

What you need to know:

  • Reason. The slow growth has been attributed to the general performance of the economy.

Kampala. Uganda’s insurance industry has registered a decline in performance, growing by just 3.6 per cent in 2016, down from 22 per cent in 2015.
According to the Insurance Regulatory Authority (IRA) report for 2016 released last week, the industry registered Shs634 billion gross premium underwritten in 2016 which represents a 3.6 per cent growth from Shs612 billion registered in 2015.
The report says non-life insurance business premiums underwritten declined from 75.9 per cent in 2015 to 70.9 per cent in 2016.
Life insurance business, on the other hand, grew by 20.87 per cent up from 16.34 per cent in 2015. Health Membership Organisations (HMOs) also registered a growth of 8.22 per cent up from 7.67 per cent in 2015.
Mr Ibrahim Kaddunabbi Lubega, the chief executive officer of IRA, said the decline in performance is inextricably linked to the performance of the economy as a whole. “The decelerated growth of 3.6 per cent posted in 2016 is largely attributed to the difficult economic conditions that our economy has undergone,” he said.
He said the slow growth was as a result of the impact of uncertainties, resulting from the elections, on the economy in the first half of 2016.
According to World Bank, “the electoral cycle held back economic activity, as would be expected. Over the first half of the year, economic indicators were downbeat – suggesting much lower aggregate demand than anticipated”. There was depreciation of the shilling and high interest rates on loans which created a slow-down in investment thus affecting the growth of the insurance industry.
According to Mr Kaddunabbi the 3.6 per cent dismal growth is as a result of the subdued growth of Uganda’s economy arising from among other things slow growth in Uganda’s major trading export partners (Europe, China, and S. Sudan). “The fresh crisis in South Sudan (in July, 2016), one of Uganda’s biggest export markets meant that an estimated weekly earning of Shs 28b from business could not be realised,” he said.

Life segment improves
Despite the dominance of the non-life segment, the life insurance segment continued to grow relatively much faster at 32.7 per cent in 2016 compared to non-life and HMOs which grew by -3.06 per cent and 8.25 per cent respectively.