What you need to know:
The new Act for example, introduces the aspect of cash and carry where clients would need to make up front premium payment in order to enjoy insurance cover.
The sector’s 16.15 per cent growth would not have been possible without these drivers. There was increased uptake of medical insurance - now the largest class of business, Daily Monitor’s Martin Luther Oketch writes.
A well-developed insurance sector is necessary for the economic development of a less developing economy like Uganda, as it provides long-term funds for physical and social infrastructure, while simultaneously strengthening risk-taking abilities.
The contribution of the insurance sector to economic development is positive and exhibits a long-run equilibrium relationship between different economic actors in the entire economy; unfortunately in Uganda the insurance is still underdeveloped.
The overall performance of Uganda’s insurance sector for the last financial year and half of 2018 indicates that the industry has been steadily growing.
A presentation by the chief executive officer of Insurance Regulatory Authority (IRA), Mr Alhaj Kaddunabbi Ibrahim Lubega, s hows that the insurance industry inproved in 2017 and the performance in the year 2017 and half year 2018 that there has been improvement in the sector in 2017 and in the first half of 2018.
Mr Lubega said Gross Written Premium (GWP) grew from Shs635 billion in 2016 (incl. HMOs) to 737 billion in 2017 representing overall growth rate of 16.13 per cent.
“Market composition: Non-life - Shs516.1 billion representing 70.01 per cent (compared to 70.91 per cent in 2016, and 75.99 per cent in 2015); Life Insurance grew to Shs168.53 billion representing a 22.86 per cent compared to 20.87 per cent in 2016 and 16.34 per cent in 2015),” he said.
Mr Lubega said Health Membership Organisation (HMOs) grew by Shs52.5 billion, representing 7.13 per cent compared to 8.22 per cent in 2016, and 7.67 per cent in 2015.
The growth rates: Non-life: 14.65 per cent compared to -3.06 per cent in 2016, and 21 per cent, in 2015, Life registered a 27.19 per cent growth compared to 32.7 per cent in 2016, and 35 per cent in 2015), HMOs registered 0.74 per cent compared to 11.24 per cent in 2016, and 0.26 per cent in 2015.
The penetration of the insurance sector in Uganda’s economy is still very low. Figures shows that the industry contributed an estimated 0.81 per cent to the GDP for 2017 compared to 0.73 per cent in 2016 and 0.76 per cent in 2015.
Insurance business is based on claims being by the general public (business entities). Statistics show that Gross claims paid out in non-life stood at Shs186 billion in 2017, up from Shs167.2 billion in 2016, and Shs152.8 billion in 2015.
Life insurance growth in 2017 was Shs52.5 billion compared to Shs47.5 billion in 2016, and Shs25.1 billion in 2015. HMOs registered Shs53.2 billion compared to Shs45.3 billion in 2016 and Shs36 billion in 2015.
Non-life Performance 2017 indicates that the Non-life business registered GWP of Shs516 billion for the year ending December 31, 2017 as compared to Shs450 billion in 2016.
This indicates that GWP grew by 14.65 per cent from the year 2016 to 2017.
Net assets of the sector stood at Shs345 billion in 2016 and grew to Shs374.2 billion in 2017, while non-life gross claims paid increased by 10.44 per cent from Shs168 billion in 2016 to Shs186 billion in 2017.
The sector analysis shows two non-life companies above Shs100 billion in GWP (exceedingly good performance and four companies above Shs20 billion and 15 companies below Shs20 billion. In this category, Sanlam General took over Lion Assurance.
The life business registered gross premiums of Shs168.5 billion for the year 2017 as compared to Shs132.5 billion in 2016. This indicates that the life business grew by 27.19 per cent from 2016 to 2017. In this category, net assets was Shs80 billion in 2016 but grew to Shs97.5 billion in 2017.
Results show two life companies registered above Shs20 billion in GWP. But one of them registered negative growth.
Computed figures show that two HMOs posted above Shs19 billion in GWP, but one of them registered negative growth.
2017 results shows that Health Membership Organisations (HMOs) posted a GWP of Shs52.7 billion as at December 31 and the composition of HMOs out of the total industry GWP was 7.13 per cent.
Mr Lubega said: “The GWP grew slightly by 1.05 per cent from 2016 to 2017. HMOs’ Gross claims paid increased by 11.27 per cent from Shs45.2 billion in 2016 to Shs50.3 billion in 2017.”
Figures show that Uganda Reinsurance (RE) had total GWP increased to Shs29.6 billion in 2017 from Shs25.3 billion in 2016 and Non-Life GWP increased from Shs.24.3 billion in 2016 to Shs28.13 billion, while Non-life Retro increased to Shs6.3 billion in 2017 from Shs3.3 billion, Life GWP increased to Shs1.52 billion in 2017 from Shs0.956 billion in 2016 and Life Retrocession increased to Shs0.914 billion in 2017 from Shs0.026 billion.
Record shows that 33 insurance brokers were licensed in 2017, while one Reinsurance broker was licensed.
Gross Premium through brokers stood at Shs210 billion and total Gross commission income increased from Shs33 billion in 2016 to Shs40.6 billion in 2017.
It has been recorded that 21 licensed loss assessor /surveyors /adjusters’ total income in 2017 was Shs3.81 billion compared to Shs3.4 billion in 2016.
The sector’s 16.15 per cent growth would not have been possible without these drivers.
There was increased uptake of medical insurance - now the largest class of business, by corporate institutions.
Medical insurance GWP grew by 33.16 per cent from Shs121 billion in 2016 to Shs161 billion in 2017.
Mr Lubega explains that there was uptake of local insurance by large infrastructural projects especially the new dams (Ayago, Achwa, Kyambura) and major road projects.
The agriculture insurance scheme also boosted the sector’s performance. “Increased uptake of agriculture insurance under the Agriculture Insurance Consortium. As at 31st March 2018, Shs5.2 billion had been utilised by 63,057 farmers,” he said.
“Innovations into the development of customer-centric products, increased consumer confidence in the sector as a result of the Authority’s efforts in ensuring that claims guidelines are adhered to, complaints are resolved promptly by the Authority’s Complaints Bureau and more disclosure of pertinent information by insurers,” Mr Lubega stated.
The Insurance Regulatory Authority further states Uganda’s economy grew by 4.8 per cent in 2017, up from 2.3 per cent in 2016. This led to an increase in insurable assets, leading to growth in the insurance sector.
Other factors for the Growth of 16.15 per cent was FDI which has rebound from the slump of 2016.
It is estimated to have increased by 18.5 per cent during the 2017 calendar year.
2018 half year performance
At end of Quarter 2, 2018; non-life insurance companies registered a gross premium income of Shs310 billion, up from Shs282 billion in the second quarter of 2017.
The life Insurance business registered a gross premium income of Shs99.53 billion by the end of this year’s second quarter, up from Shs75 billion in Q2, 2017.
Activities. Fraud detection, prevention and control, compliance with the requirements imposed by the new Insurance Act, 2017, innovation into product development including supportive frameworks to leverage on technology and market conduct issues (underwriting versus pricing, claims settlement, complaints resolution).
Management expenses (especially for those well above the industry average), market development Initiatives and consolidation of the achieved momentum.