We should widen the reach of insurance services countrywide

At less than 1 per cent, Uganda has the least penetration levels of insurance services in the region. Efforts continue to be made by the players to address the short-reach of insurance services. In a 2016 publication titled ‘Waves of change revisited: Insurance opportunities in sub-Saharan Africa’, global professional services firm Ernst & Young remarked that Uganda’s insurance market will grow by 8.2 per cent per year through 2018. The same report concluded that ‘bancassurance distribution networks and mobile insurance products are expected to drive future growth’.

The amendments made to the Financial Institutions law and the subsequent regulations that enabled financial institutions in Uganda to provide bancassurance services were a much welcome development. Little wonder it was greeted with excitement by insurance firms and banks alike.

The law defines bancassurance to mean using a financial institution and its branches, sales network and customer relationships to sell insurance products. To date, six commercial banks - Diamond Trust Bank, Stanbic Bank, Barclays Bank, NC Bank, Bank of Africa and Finance Trust Bank - have already been licensed by the Insurance Regulatory Authority (IRA) to provide bancassurance services in Uganda. Generally, the banks will act as intermediaries that offer insurance products of one or more insurance companies for a “commission fee’’ from the insurance providers. The provision of insurance services through banks’ networks and clientele will help to improve access to insurance services due to increase in insurance service points.

Insurance products will now be made readily available to customers at their places of convenience, that is, the banking points where they are already accessing banking services. The banks will leverage on existing customer networks and relationships to boost sales of insurance products.

The banks, in partnership with insurance firms will also be in position to develop customised products that suit the varied needs of the clients they have. Also, with banks as another distribution channel, it is expected that the insurance companies shall be saved from over reliance on agents as the only readily available distribution channel for their products.
The new products developed to suit consumer’s needs are likely to be the type that may otherwise have not been available had banks and insurers worked independently. For example, ‘overdraft insurance’, ‘depositors’ insurance’ and other covers sold in conjunction with the existing bank services. The convenience offered by bancassurance is also expected to increase customer satisfaction.