'Banks can sell insurance'
Posted Tuesday, October 29 2013 at 01:00
The move, if approved, will, according to players, help in the growth of insurance numbers in the country.
The intended move to allow commercial banks to sell insurance products will boost insurance penetration levels, an industry player has said.
Speaking on the sidelines of an open-day for the insurance sector sensitisation in Kampala last week, Mr Elvis Khisa, the Insurance Institute of Uganda chief executive officer, said bancassurance – a process of selling insurance products by banks – will be key in the growth of Uganda’s insurance numbers.
“It is much easier for banks to lure people into buying insurance because they are more confident in the industry today,” Mr Khisa said.
According to Mr Khisa, the insurance sector’s image has been tainted by some firms that delay or reject payment of clients’ claims.
This has as a result affected the growth of the insurance sector that for about five years has stagnated at about 0.6 per cent.
The move, however, will have to await the amendment of the Financial Institutions Act 2004.
Individual banks must also be approved by the Insurance Regulatory Authority licensing them to sell insurance policies.
Bancassurance involves commercial banks providing outlets through various branches to insurance products, especially life assurance and pension products.
Mr Khisa, however, said once approved, banks should not appear to be competing with insurance companies, but rather complete the distribution channels of insurance products.