Insurers paid out claims worth Shs225.5b in the third quarter of 2020. However, the sector collected Shs818b in premiums.
Insurance companies shoulder risks that customer would otherwise face in case of an occurrence, for example, a fire, at a fee known as premium.
Shouldering the risk signifies that an insurance company will pay out money defined as a claim to a customer on the off chance that the insured occurrence.
Uganda’s insurance industry comprises nine life insurance companies, 21 non-life insurance companies, two micro insurers and five health membership organisations.
Data released by the Insurance Regulatory Authority (IRA) yesterday indicate that insurance companies paid out more claims between January and September 2020 compared to the same period in 2019.
Customers collected claims worth Shs225.5b in the third quarter of 2020 compared to Shs200.7b in 2019.
Non-life, otherwise known as general insurance companies, paid out the most claims, recording Shs112.5b in net claims, compared to shs82.1b paid out by life companies.
The five licensed health membership organisations paid out Shs30.7b in claims and micro insurers paid Shs44.7m. According to IRA, increased claims pay-out builds confidence in the sector, which could explain the increase in written premiums.
The industry registered a 9.3 per cent growth in premiums, collecting Shs818b in the third quarter of 2020 compared to Shs747.6b during the same period in 2019.
The performance, albeit good, was still lower than the average growth of more than 10 per cent, which Mr Alhaj Kaddunabbi Ibrahim Lubega, the IRA chief executive officer, said was partly affected by unfavourable macro-economic conditions occasioned by Covid-19.
“Growth of 3.1 per cent was registered in 2019/20 compared to 6.8 per cent in 2018/19, much lower than the previous year, largely due to the reduced global demand,” he said.
General insurance companies contributed most to the premiums written, registering Shs524.8b reflective of 64.1 per cent of gross written premiums while the life segment wrote Shs237.5b, representing 29 per cent of gross written premium.
Health membership organisations wrote Shs55.9b while micro insurance companies posted Shs373.9m in premiums.
Jubilee Insurance, UAP, Sanlam, Britam and Insurance Company of East Africa were the top five leading general insurance companies in gross written premiums.
Jubilee, ICEA, Prudential, UAP and Liberty were the leading life insurance companies that collected the highest premiums.
According to Mr Kaddunabbi, the sector was affected by Covid-19 with related effects such as lockdown that slowed down economic activities and low consumer awareness among others.
The insurance sector adopted innovations during the year, influenced by Covid-19 restrictions.
Players in July launched the online motor third party payment portal, which has seen sales in excess of Shs8.8b paid through the platform for more than 116,000 policies.
The industry is also expected to start implementing local marine insurance in the quarter ending March 2021, after facilitating frameworks were developed and signed off.
The regulator is also in the process of setting up the insurance appeals tribunal which will settle disputes in the industry.
On the agenda for 2021, IRA reveals plans to ensure operationalisation of the Insurance Act, finalising the pending regulations and the new motor vehicle insurance law.