Insurance companies hit Shs1 trillion in gross premiums

Monday June 14 2021
fina02pix

Closed shops in Kampala. The insurance industry recorded a 9.34 per cent growth in 2020 compared to 13.2 per cent in 2019 as a result of slowed business activity. Photo | Rachel Mabala

By Christine Kasemiire

Uganda’s insurance industry hit the trillion ceiling in 2020 having raised Shs1.06 trillion in gross written premiums (GWP) despite the pandemic.

While releasing the 2020 industry performance report virtually, Al Haj Ibrahim Kaddunabbi Lubega, the chief executive officer of Insurance Regulatory Authority (IRA), said the trillion mark is a milestone for the industry.

 “Overall, the industry remained on a positive growth trajectory growing from Shs 974.4billion in 2019 to Shs1.065 trillion in 2020 reflecting a 9.34 per cent growth. This is a slight decline in comparison to 2019 when the industry grew by 13.2 per cent,” he said.

Pandemic slows growth
Mr Kaddunabbi attributed the reclined growth to slowed business activity with the outbreak of the Covid-19 pandemic.

The industry performance indicates that non-life business which covers things such as cars and buildings grew by 6.9 per cent in 2020, generating Shs664.9 billion in GWP, up from Shs621.69 billion in 2019.

Life insurance, on the other hand, garnered Shs324.35 billion in GWP in 2020, up from Shs276.32 billion in 2019 representing a 17.3 per cent growth in premiums.

Advertisement

Health Membership Organisations (the medical insurance providers) dropped by 0.7 per cent; generating Shs75.56 billion down from Shs76.11 billion in 2019 while the two micro insurance companies in the market recorded Shs541 million in premiums up from Shs299 million in 2019.

According to the regulator, growth of micro insurance which spurred from Shs24m in 2018 which was the premier year of operation points to the unserved market which is a good indicator of insurance widening.

Mr Kaddunabbi attributed the improved performance to enhanced distribution channels such as bancassurance, digitisation, increased uptake of individual life insurance, and sustained growth in uptake of medical insurance especially by corporate institutions.

Agricultural insurance in the year 2020 saw 54,287 farmers covered generating Shs11.4 billion in GWPs to the industry compared to 81,794 farmers, and Shs 12.7 billion in 2019.
The regulator still attributed the reduction in numbers mainly to slow activity as a result of Covid-19.

Rise in farmers’ claims
However, the claims paid to the farmers increased exponentially during 2020, increasing to Shs4.1 billion from Shs1.8 billion in 2019.

This could be explained by the effects of Covid-19 which led to the loss of many agricultural products due to limited demand occasioned by the closure of borders culminating into losses especially for perishables and for some, negligible earnings from low priced produce.

For instance, during lockdown, the price of eggs fell exponentially and some farmers were stuck with their produce without market.
There was also a general increase in claims paid by the industry from Shs374.9 billion in 2019 to Shs444.69 in 2020, reflecting 18.6 per cent surge.
Uganda’s insurance penetration, however, still remains low at only 0.77 per cent.

Life insurance   
Life insurance, on the other hand, garnered Shs324.35 billion in GWP in 2020, up from Shs276.32 billion in 2019 representing a 17.3 per cent growth in premiums.

There was also a general increase in claims paid by the industry from Shs374.9 billion in 2019 to Shs444.69 in 2020, reflecting 18.6 per cent surge.
Uganda’s insurance penetration, however, still remains low at only 0.77 per cent.

editorial@ug.nationmedia.com

Advertisement