Bancassurance the new driver deepening financial inclusion, insurance penetration 

Mr Denis Kitoshi

What you need to know:

  • According to IRA, the insurance business earned gross written premiums of Shs1.4 trillion in 2022, of which the bancassurance portion of premiums was Shs143b 

Financial Inclusion in Uganda remains alarmingly low. A 2021 National Labor Force survey indicates that 87 percent of Ugandans are not banked. 

In addition, according to a 2020 Bank of Uganda baseline survey, the overall financial capability score of Ugandans is only at 50.4 percent. 

The situation with insurance penetration is not any better although, significant strides have been made to grow the sector and increase awareness over the years. 

Current insurance penetration in Uganda remains below 1 percent, according to Insurance Regulatory Authority.

But there is light at the end of the tunnel as the sector continues to work overnight to create solutions that will deepen insurance penetration. 

Among the solutions, for now, is Bancassurance, which is perched up there, among the most effective darts thrown at driving financial inclusion. 

Bancassurance is where insurance companies utilise banks as an additional distribution channel for their products. In this model, the bank functions as an intermediary, complimenting the insurance company in reaching its targeted and prospective consumers. 

This arrangement appears to have mutual benefits for both the banks and the insurance companies. The banks can use their current staff to earn non-funded income (commissions) by delivering insurance services in addition to their existing streams of income. 

On the other hand, insurers can gain access to new customers through this distribution channel, which increases their revenues, market share and drives insurance penetration. This is a win-win for both parties.

Since the inception of Bancassurance in 2017, it has played an increasingly important role in banking operations and driving insurance penetration. The banks are now generating considerable commission income, and it has become one of the most successful distribution channels within the insurance markets. 

The commission that is presently produced by bancassurance business gives the banks a significant boost to their financial standing. 

According to IRA, the insurance business earned gross written premiums of Shs1.4 trillion in 2022, of which the bancassurance portion of premiums was Shs143b, which is an increase from Shs103b in 2021. 

The bancassurance market segment has experienced year-on-year growth of 38 percent, and its contribution to the industry's total premiums in 2022 was 9.9 percent. 

In this article, we will explore ways in which bancassurance can play a significant role in driving financial inclusion and insurance penetrations in the years to come. 

Unlocking value for customers

At the heart of bancassurance lies a customer-centric approach that prioritises convenience, choice, and tailor-made solutions. By leveraging the banks’ extensive branch networks and trusted relationships, customers gain easy access to a wide range of insurance products, including life insurance, health insurance, property insurance, and investment-linked policies. 

This convergence of services empowers customers to address their financial risks and secure their future through a trusted institution they already have a relationship with.

Empowering financial well-being

Bancassurance has the power to transform how customers perceive and engage with financial products. Through comprehensive financial planning and risk management, bancassurance enables customers to protect their assets, mitigate risks, and secure their loved ones' futures. 

By offering a diverse range of insurance products, tailored to meet specific customer needs, this collaboration ensures that individuals and businesses alike navigate life's uncertainties with confidence.

The role of technology

In today's digital era, technology plays a pivotal role in redefining the customer experience. Bancassurance harnesses technological advancements to streamline processes, enhance accessibility, and improve service delivery. 

Through user-friendly online platforms and mobile applications, customers can easily explore insurance options, receive personalised recommendations, manage their policies, and initiate claims, all with just a few clicks. 

Technology-driven innovations ensure that bancassurance remains a convenient and efficient solution for customers, empowering them to take control of their financial well-being.

Leading the way

In Uganda’s vibrant insurance landscape, UAP Old Mutual Life Assurance stands out as one of the pioneers and leaders in the bancassurance space. 

With a strong legacy and a commitment to excellence, UAP Old Mutual has consistently embraced innovation and collaboration to cater to evolving customer needs. 

Through strategic partnerships with leading banks, we have expanded our reach, making our comprehensive suite of insurance solutions easily accessible to a wider customer base. 

Denis Kitoshi, is the UAP Old Mutual Life Assurance Bancassurance manager