Insurers moot plan to start micro insurance
Mr Lubega Kaddunabbi (L), the Insurance Regulatory Authority chief executive officer chats with Ronald Zaake (M), the Insurance Institute of Uganda (IIU) president, and Elvis Khisa, the executive director of IIU, at the launch of micro insurance week. Photo by Eseri Watsemwa
The Insurance Regulatory Authority (IRA) will soon start licencing micro-insurance players to enable low income earners access cheaper insurance services.
Speaking at a breakfast meeting organised by the Insurance Institute of Uganda in Kampala, the IRA chief executive officer ,Mr Ibrahim Kaddunabbi Lubega, said the move seeks to increase uptake of insurance services in the country as well as boosting penetration.
Uganda has the lowest insurance uptake in the region, estimated at 0.85 per cent, compared to Kenya’s 3.5 per cent, Rwanda’s 2.3 per cent and Tanzania’s 1.1 per cent.
The micro-insurance service providers will be subjected to lesser requirements compared to the traditional insurance companies, according to Mr Kaddunabbi.
Insurance companies underwriting life insurance business are required to have minimum capital of Shs3b while those underwriting non-life insurance are supposed to have a minimum capital of Shs4b. Micro-insurance firms will be required to have minimum capital of Shs100m.
Micro-insurance, a product that offers coverage to low-income earners, seeks to enhance access to insurance at affordable rates, especially among low income earners.
The Insurance Institute of Uganda chief executive officer, Mr Elvis Khisa, said lesser requirements for potential micro-insurance players seeks to make the service more attractive to both the public and insurance companies.
“Imagine we have only about 800,000 policies yet there are about 35 million people in Uganda, so we want to bring on board low income earners to buy insurance and increase uptake levels,” Mr Khisa said.
The executive director of the Association of Microfinance Institutions in Uganda, Mr David Baguma, urged insurance players to tap into the unexploited micro-finance sector to boost insurance penetration.
“Microfinance institutions have grown and now have a portfolio of Shs400b, this makes business sense, so insurance companies should tap into this because microfinance presents a potential for huge returns,” Mr Baguma said.
Uganda’s insurance sector has been growing steadily with gross premiums increasing from Shs34.8b in 2000 to Shs.8b in 2004 and is estimated to have grown to Shs500b in 2014.
