Stop encroaching on our products, insurance brokers tell banks

Friday April 02 2021

The Insurance Brokers Association of Uganda chairperson, Solomon Rubondo. PHOTO/COURTESY

By Justus Lyatuu

KAMPALA. Insurance brokers have asked banks to build separate product portfolio for Bancassasurance instead of encroaching on their market.
Speaking ahead of an April 8 brokers’ conference in Kampala, Mr Solomon Rubondo, the Insurance Brokers Association of Uganda chairperson, said banks are not being fair to the brokers, noting they have taken away several of their clients, which is threatening brokerage companies.
“Most of our clients access insurance through banks [therefore] banks have taken advantage of that, which is affecting our businesses,” he said, noting they had discussed the matter with Insurance Regulatory Authority with the view of asking banks that are involved in Bancassasurance to create a new market. 
“We feel the infiltration. We feel the pressure. We have discussed it with the regulators and Bancassasurance [banks] to create a new market,” Mr Rubondo said. 
In 2016, Parliament amended the Financial Institutions Act, which allowed banks to sell insurance policies.
This had been intended to, in part, increase penetration, which continues to stagger below 1 per cent. 
However, while brokers take the heat of falling revenues, banks have reported growth in earnings from Bancassasurance, which according to Uganda Insurance Regulatory Authority, during the 2020 third quarter, contributed Shs52b or 6.36 per cent out of the Shs818b in gross written premiums. 
Mr Rubondo said that there was need for banks to create new products instead of encroaching on existing ones, which, as he said, does not help to grow an industry that has over the years suffered low penetration. 
Banks, he said, must not act as agents but create new products that are specific to them. 
The Insurance Brokers Association of Uganda conference will seek to create a channel through which brokers can identify and guard against risk, amid growing challenges occasioned by Covid-19. 
Mr Robundo also noted that the world was experiencing a lot of disruptive occurrences among them, a debilitating Covid-19 pandemic, locust invasions and floods, among others. 

Written premiums        
According to IRA, gross premium written through Bancassurance amounted to Shs52b in the third quarter of 2020. As a result, banks earned a Shs8.2b, which grew by 25.6 per cent compared to Shs6.5b over the same period in 2019. 

Mr Ibrahim Kaddunabbi, the IRA chief executive officer, has previously said they will  support Bancassurance to nurture a new distribution channel.