‘Government must insure its assets to save taxpayers’ money’

What would you have liked to see in the National Budget read recently?
In addition to the compulsory Workers’ compensation insurance cover, Public Liability, Fire (for properties) and contractors, all risk insurance covers should be made mandatory to provide protection to members of the public and investors.
There is also a need to review the amount of Stamp Duty being charged on insurance policies downwards. For example, on Third Party insurance, stamp duty is higher than the basic premium.

Do you think the budget did some justice to the insurance sector?
Insurance as an industry or financial sector in totality does not work in isolation. If the economy is doing well, then the industry also thrives. If the budget can stimulate the economy, then that would be good for the industry.

How would you describe insurance business?
Insurance is an interesting but challenging business. The biggest challenge is lack of awareness amongst the public which has meant very low penetration.

Why is insurance penetration still below 1 per cent?
It is going to be a process. One cannot completely disregard our history and the economic challenges we have had as a country. In the late 1980s when the Ugandan Shilling was devalued, confidence in the insurance industry was dented because products such as life policies completely became worthless. In this industry, we sell a promise, that in the event of one suffering a loss, we are there to cover this loss.
So, that currency devaluation left people wondering whether insurance could be trusted, whether they would actually be paid once they suffered a loss or what would happen in case of another currency restructuring. For people to embrace insurance, they must appreciate and understand its value. Otherwise, they stay away.

Even now, when things become tight and there is some kind of cash flow squeeze, insurance drops to the bottom of people’s and businesses’ priority lists.
The insurance component is a must with large infrastructure projects like these, since all financial institutions, whether local or international, demand that whatever they put their money into must be insured.

What lessons can you pick from the developed world where insurance penetration is fairly high?
The lessons vary. In Europe and America, insurance is a way of life; whether it’s a home or business, insurance is budgeted for. This has been the case for several generations.
China, which has the largest insurance company in the world – Ping An –employs one million people and posted revenues of $143 billion in 2017.
Interestingly, Pin An was only established 30 years ago. This is impressive given that companies such as Prudential and Sanlam are more than 100 years old. This is a clear indication that a large economy has a correlation to the size of the insurance industry in a particular country.

You have been pushing for government support. Why?
Government support specifically in terms of enforcement (marine insurance) and government insuring its assets. Let’s us take marine insurance as an example. A Ugandan importer will buy their goods on Cost Insurance Freight basis from China, but will struggle having their claim settled by the Chinese if their container gets a problem in transit.
As such, we have, for a very long time, been lobbying that every importer is legally required to buy their marine insurance locally in Uganda.
Our cries have been heard and now a law (the Insurance Act 2017) is in place to address this. The insurance industry is currently engaging Uganda Revenue Authority to help on this front, since all imports are tracked by the tax body.

Government can also support our industry by insuring all its assets including cars and property. Currently, if a minister’s brand new Toyota Land Cruiser with value of $150,000 (about Shs570 million) is involved in an accident and is written off, government will simply reallocate more money to buy another one, yet it would have been an insurance firm making the reimbursement, had the car been insured.
It is the same scenario, when government property is destroyed in a fire or something. Clearly, both the insurance industry and government would mutually benefit were the state to underwrite its assets and properties.

When a claim is reported by a client, how long does a file take at any desk? How can you shorten the process?
While each claim is unique, we always aim at clearing a payment within a week from the day we receive all the necessary documentation. But the challenge we must confront is how to bring that period down to say four days or even two days.
In the USA, a company called Lemonade settles at least 25 per cent of its claims within 3 seconds! This is possible through its phone app, which relies on artificial intelligence.

The industry performance hasn’t been that impressive lately. What is the problem?
Following several years of stagnation due to different reasons, we registered a 12 per cent growth in gross written premium last year, with Shs16.3 billion in gross written premiums. Our 2018 goal is to close at just over Shs20 billion - a challenging target - but one we shall achieve.
Our capacity growth is a must so that we can take on much bigger risk like oil, gas and aviation.