he perception of brokers is like that of middlemen. Who exactly are these insurance brokers?
An insurance broker is a professional expert, trained in matters of insurance. Their main role is to give advice to clients in regards to demystifying risks. They are supposed to offer the client risk mitigation measures and transfer the balance of the risk to the insurance company.
So the insurance brokers know the insurance market and should know all the risks. They have a lot of data that they go through with the clients to appreciate where the major risks are and advise them on what should be done to insure against the proper risks. Importantly, he does not charge the client, the insurance company pays him for that service. So brokers add value in matters of risk and risk management.
Compared to Kenya, for instance, insurance uptake here is really low? How can the gap be closed?
If you look at the economic situation in Kenya, it is slightly different from here. In Uganda, we still have a very unique way of living. Some are still being supported by parents. We still have a lot of food, so people are not relying on supermarkets for food. Somehow, people here can survive even without jobs. But in Kenya, the situation is a little different. So, people there are likely to seek for insurance than may be the case here.
It is also a much bigger and diverse economy. You will find that because of that, every shilling a Kenyan makes is most likely as a result of loan. So whatever asset he buys, he is compelled to insure it and this is not the case here.
But we are making strides here. Our involvement in the banking sector is bearing some fruits. The middle class is steadily growing. As it grows, then the level of needs will go up and the need for insurance and insurance brokers will be inevitable.
How do you get Ugandans to appreciate insurance?
People are beginning to understand insurance. But we still have to create trust to make everybody appreciate that insurance is a strategic partner in life; everything you do involves risks. Without insurance at your comfort, you will find that you are assuming a lot of risks. When losses occur, you find yourself disadvantaged.
I also think we need to create trust among the population. The common notion is that insurance is taking my money but I will not be compensated when need arises. That shouldn’t be the case. The person who is insuring should know that at the end of the day he/she will get paid because insurance is a safety net.
What necessitates the brokers’ insurance conference? Is it as result of lack of trust?
For a long time, we have been looking at situations as they arise and supporting other causes. But this time we said no. We have become of age. We have been in the market for over 50 years as an association. With the support of our colleagues from the insurance association, we want to reflect more to the public. That is why we called the conference theme: “The deepening agenda, demystifying insurance.”
People always try to make insurance look as if it is the same as banking. But insurance is premised with risk while in banking, you put money in the bank and you go back home and find it tomorrow if you want. But for insurance you buy it and it comes in handy when a loss has occurred.
Does the economy explain the reason why insurance is the way it is here?
I understand that the sector benefits when the economy grows. There is relationship between the two. But sooner or later, the oil tap will open. Agriculture sector may become a bigger economy, so how are the players positioning themselves to tap the opportunities when they begin to flow?
When it comes to oil and gas, you will appreciate the level of investment is very high. So, we as the insurance brokers should team up with the ready markets that have been doing this for a very long time.
I think that $20b investment is expected to get into the oil and gas sector and the insurance sector will be part of that investment, which means you can employ more people. It also means you will employ more engineers; we can share part of this locally as we partner with our wider insurance companies to take the bigger part of the risk. So, as the economy grows, insurance will also grow and there will be more money available for the employees.
Let’s talk about some of the industry challenges.
Technology is key. Continuous communication is also critical. The hierarchy of needs according to economist starts with food, then shelter. Normally, insurance is at the bottom. But increasingly, insurance is becoming very strategic.
Our challenge is to have it on top of the hierarchy of needs. It is a fight that can be won. But we must start now.