Insurance industry looks to informal sector for growth

KAMPALA.

With progress in the insurance industry as demonstrated by the 31 per cent growth registered in the previous year, the industry regulator has said its problem has since shifted from stimulating the growth to sustaining it.
The latest Insurance market report indicates that the previous year gross insurance premium written rose to Shs463 billion from Shs351 billion during 2012, representing a remarkable 31 per cent growth in the industry.
“Realising 31 per cent growth in gross written premium is not a mean achievement. However, sustaining it over years is even harder,” Mr Gaudioso Kabondo Tindamanyire, the board chairman of Insurance Regulatory Authority of Uganda, said in the report.
In an interview with the industry players, it emerged the sustainability that the regulator is talking about can be triggered by innovations that target people in the informal sector, a substantial number of whom are low income earners.
“We are looking at offering the funeral insurance at $1 per month. This, we believe will reduce the rate at which people borrow when untimely calamities such as death occur.” the Jubilee Insurance board chairman, Mr Nizar Juma, said on Monday at a dinner the insurance company threw to appreciate its customers in Uganda.
He continued: “We are not afraid to take bold decisions. In addition to the range of products we provide, we are also looking at offering crop insurance and many more other insurance that many people will be afraid to offer. In the next few years we will offer so much micro insurance.”
Microinsurance is a mechanism to protect poor people against risk (e.g. accident, illness, death in the family, and natural disasters) in exchange for payments tailored to their needs, income, and level of risk. It is aimed primarily at the developing world´s low-income workers, especially those in the informal economy who tend to be underserved by mainstream commercial and social insurance schemes.
To drive the much needed sustainability, Mr Tindamanyire said: “Sustainability requires that companies change how they market, reconfigure processes, strategise talent to pursue market opportunities, and develop trusted, affordable and understandable products in line with the needs of the economy.”

Insurance penetration

According to the industry report, insurance penetration which is still below 10 per cent in the country has increased from 0.66 per cent to 0.85 per cent. The regulator’s expectation; however is to increase it to 1.3 per cent by 2016. With opportunities in the oil and gas sector, micro insurance, the expected national health insurance scheme, and the liberalised pension sector, the target is expected to be achieved.

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