Insurance likely to recover fast after Covid-19 - report

The insurance sector is ranked eight among sectors that are most likely to recover fater than others after Covid-19.
A report by Financial Sector Deepening Uganda (FSDU) to determine the impact of Covid-19 on multiple sectors including tourism and transport, ranks the insurance sector as highly likely to recover after Covid-19.

Mr Ramadhan Ggoobi, an economics lecturer at Makerere University Business School, explained that people’s unpredictability of the pandemic has increased the public’s intolerance to risk.

“People will have a lower appetite for risks than they had before. The economic downturn is likely to increase the demand for insurance solutions, especially those with price propositions that are simple, transparent and cost-efficient,” he said.

He was speaking to insurers at an online meeting organised by Uganda Insurance Authority (IRA) to discuss Insurance at the Dawn of Covid-19: Analysis of current challenges, responses and opportunities for insurers in the “new normal”.
According to Mr Ggoobi, the insurance sector, which feeds directly from other sectors is expected to suffer a severe blow back from the effects of Covid-19 on the economy.

He said the negative impact on tourism, one of the majorly affected sectors, travel and trade is expected to also impact insurance.

“While premiums are expected to drop in 2020, claims are expected to increase on account of increased liability insurance claims for example hotels or airlines sued for negligence if one contracts covid-19 at their premises,” he said.
Workers compensation is also expected to increase in case of contraction of covid-19.
“Event cancellation; outlook shows events will struggle to get insurance coverage in the future,” Mr Ggoobi said.
Opportunities
Mr Ggoobi said the public had realised that at the end of the day there is nothing of greater importance than life and health hence shifting obsession from material possessions to experiences.

“Health insurance, there is a shift from only covering risk when there is damage, to rendering preventive services; innovations among technology providers to link insurers to health ecosystems, this is an opportunity that can be exploited,” he said.

Increasing demand for insurance
According to Mr Ggoobi, insurers need to go digital because the more close such as available to customers, the more they will subscribe to them.

However, insurers need to solve privacy issues as they make data protection part of the insurance chain.

Mr Goobi also notes that the economic downturn is likely to increase the demand for insurance solutions, especially those with price propositions that are simple, transparent and cost-efficient.
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