Bancassurance's transformative impact on Uganda’s insurance market

What you need to know:

This collaboration is a symbiotic relationship where banks earn non-interest income, complementing their traditional revenue streams, while insurance firms expand their market reach with the help of a trusted financial intermediary

In the ever-evolving landscape of financial services, one term has been making significant waves bancassurance. This harmonious combination of banking and insurance not only simplifies a complex concept but also creates a dynamic synergy that benefits both the banking and insurance sectors.

Bancassurance, at its core, is about banks and insurance companies joining forces in a strategic partnership. The bank becomes a conduit, offering its clientele the insurance products of a partnered insurance company. This collaboration is a symbiotic relationship where banks earn non-interest income, complementing their traditional revenue streams, while insurance firms expand their market reach with the help of a trusted financial intermediary.

At the heart of this transformative trend is the win-win situation for all stakeholders. Customers, in turn, also reap the benefits of a diverse range of products, and enhanced convenience.

Bancassurance contribution to industry performance

This global trend has found a particularly impactful resonance in Uganda. Since its introduction in 2017, bancassurance has been a key player in shaping the financial landscape of the country. In Uganda, the numbers as reported by the Insurance Regulatory Authority (IRA) tell a compelling story.

In 2020, premiums underwritten through bancassurance accounted for 7.83 percent of the total underwritten premiums, a significant jump from 5.5 percent in 2019. Furthermore, premiums underwritten grew from Shs83.34 billion in 2020 reaching Shs103.54 billion in 2021.

The growth trajectory continued in 2022, generating UShs142.7 billion, showcasing the enduring appeal of this collaborative model. As of quarter 3, 2023, bancassurance’s contribution to the industry grew to 10.96% from 10.09% in Q2.

What makes bancassurance particularly attractive to commercial banks is its ability to generate a new and lucrative revenue stream without incurring high setup costs. This feebased income is, in essence, risk-free for banks, as they play the intermediary role without exposure to insurance-related risks. For insurance companies, bancassurance offers an unparalleled opportunity to increase market penetration and premium turnover at minimal additional cost.

UAP Old Mutual Insurance and Bancassurance collaboration

UAP Old Mutual Insurance, with its rich legacy and unwavering commitment to excellence, has been at the forefront of embracing this kind of collaboration to meet the evolving needs of its customers. Among its partners under bancassurance is KCB Uganda. The commercial bank stands out as a prime example of a successful bancassurance partner, boasting a market share of 4.23% and Gross Written Premium of 2,926,918,693 as of Q3 2023, according to Insurance Regulatory Authority reports.

The synergy between UAP Old Mutual Insurance and KCB Bank has been further strengthened through a recent coffee and connect meeting. This collaboration seeks to reinforce their relationship and extend the accessibility of their combined products to a wider customer base.

As both companies aim for a more customer centric approach, there are several initiatives that have supported in strengthening the relationship. For Instance;

Cross-Training and Knowledge Sharing

One distinctive aspect of this collaboration is the emphasis on cross-training and knowledge sharing between the teams of UAP Old Mutual Insurance and KCB Bank. This initiative ensures that employees from both organizations are well-versed in each other's products and services. This not only fosters a deeper understanding but also enhances the efficiency of service delivery, creating a unique synergy.

Joint Marketing Campaigns

The partnership is strengthened through joint marketing campaigns that promote the combined offerings of UAP Old Mutual Insurance and KCB Bank. This not only increases brand visibility but also communicates the value proposition of the collaboration to a wider audience. The strategic use of marketing channels and co-branded campaigns sets this collaboration apart in terms of its visibility and market impact.

Furthermore, there is a shared commitment between UAP Old Mutual Insurance and KCB Bank to prioritize understanding and addressing the unique needs of their customers. This involves joint customer feedback mechanisms, personalized solutions, and a shared Controlled Disclosure commitment to delivering exceptional customer service, setting them apart in terms of their dedication to client satisfaction.

As a result of this partnership between UAP Old Mutual Insurance and KCB Bank has brought about numerous benefits for customers including;

Convenience and Accessibility

Customers enjoy the convenience of accessing both banking and insurance services under one roof. For instance, a customer can easily discuss their insurance needs while handling banking transactions at a KCB branch, streamlining the financial management process.

Tailored Solutions for Diverse Needs

The partnership offers a diverse range of insurance products catering to various needs. Whether its life insurance, health insurance, or general insurance, customers can find tailored solutions that align with their unique requirements and financial goals.

Simplified Claims Process

The collaboration between UAP Old Mutual Insurance and KCB Bank ensures seamless integration of banking and insurance services, making it easier for customers to apply for policies and process claims without unnecessary hassles.

This partnership extends beyond traditional insurance products to include financial planning and advisory services. Customers can benefit from expert advice on managing their finances, ensuring a holistic approach to wealth creation, protection, and growth.

Quick and Responsive Customer Support

This collaboration ensures that customers receive prompt and responsive support. Whether they have inquiries about their insurance policies or need assistance with banking services, a unified customer support system provides efficient solutions, enhancing overall satisfaction.

As we navigate the future of financial services in Uganda, bancassurance stands as a beacon of innovation, fostering collaboration that transforms challenges into opportunities. It's not merely a partnership, it's a strategic alliance reshaping the way Ugandans access and Controlled Disclosure benefit from insurance services. The growth of bancassurance is not just a trend but a testament to its enduring impact on financial inclusion and the holistic growth insurance sector in Uganda.