Kampala. Complicated insurance products that are not only difficult to sell but also derail the sub-sector’s growth, the industry regulator has said.
To penetrate the market which according to Insurance Regulatory Authority of Uganda (IRA) is annoyingly low, the industry players must grab the opportunity that bancassurance initiative presents to provide simple, meaningful and quality insurance products to targeted audience.
Speaking while unveiling the Tropical Bank Bancassurance last week in Kampala, the chief executive officer of the Insurance Regulatory Authority of Uganda (IRA), Mr Ibrahim Kaddunabbi Lubega, said: “Demand for simple insurance products shouldn’t be understated.”
He continued: “Always make simple and easy to understand products for all types of your target audience. This will make you get closer to the uninsured population.”
With this move, Tropical Banks becomes the 15th commercial bank in the country to offer Bancassurance services.
Industry players, including the regulator, believes that the relationship between the two — the bank and an insurance company, will increase the insurance uptake that is currently at 0.8 per cent.
Under this arrangement, banks offer insurance products or insurance benefits to the bank’s customers under the same roof.
“Bancassurance is an innovation that will deepen insurance services. For our customers, we will always keep it simple and professional. Our products will also embed the component of insurance because that is crucial in mitigating risks,” Tropical Bank managing director, Denis Kaketo said in his remarks.
According to Mr Kaddunabbi, total insurance premiums collected from bancassurance channels thus far is Shs13 billion.
So far, 15 out of 24 banks have acquired bancassurance business licences since the regulations were gazetted last year in July.
Commission: Commissions earned by banks from these products range from between 10 to 25 per cent of the value of each policy sold. Terms agreed between the different banks and insurance companies also determines how much commissioned can be accrued from each deal.
The remaining banks can only be offered licences after fulfilling all the necessary conditions that make them ready to do this business.