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How ESG-driven products can transform the insurance sector
Clara Splendor Kaganzi
What you need to know:
Environmental, Social, and Governance (ESG) principles present an opportunity for transformation, and integrating them into the industry could unlock new opportunities
Uganda's insurance sector remains critically low at a rate of 0.867percent, according to the 2023 Insurance Regulatory Authority of Uganda report. This figure contrasts with its East African neighbours: Kenya boasts a rate of 2.4 percent, Tanzania 1.3 percent, and Rwanda 1.4 percent. The gap signals both a challenge and an opportunity. Environmental, Social, and Governance (ESG) principles present an opportunity for transformation, and integrating them into the industry could unlock new opportunities. ESG refers to a set of criteria used to evaluate a company's operations and performance based on its ethical impact and sustainability practices. The environmental aspect assesses how a company interacts with the natural environment, including its efforts to reduce carbon emissions, manage waste, and utilise sustainable resources.
The social component examines how a company manages relationships with employees, suppliers, customers, and the communities where it operates, focusing on issues like diversity and community engagement. The governance aspect evaluates the company's leadership structure, transparency, ethical behaviour, and compliance with regulations. Together, the ESG criteria provide a comprehensive framework for understanding the insurer’s commitment to responsible business practices that drive penetration. Globally, insurers are responding to growing demand for sustainable products. A 2022 Deloitte survey revealed that 83 percent of insurance executives believe ESG integration provides a competitive edge. Additionally, a Swiss Re’s 2022 report found a 15–30 percent increase in parametric insurance adoption when linked to sustainability incentives.
This growing awareness and adoption is not only reshaping the global market but also offers valuable lessons for Uganda. Learning from countries that have successfully implemented ESG-aligned insurance products could help local insurers drive trust, improve relevance, and unlock untapped segments of the market. The rise of ESG driven products has been key in enhancing insurance penetration in countries like South Africa and Namibia. South Africa is a prime example, with an insurance penetration rate of 11.3 percent, the highest in Africa, according to a 2022 report from TechPoint Africa. Additionally, South African insurers have embraced green insurance products that support renewable energy and sustainable development. Projections from the report suggest that the country’s green economy could generate up to $2.7 billion in annual insurance premiums by 2030.
According to the 2025 African Cities Research Consortium (ACRC) report, Kampala has experienced massive floods largely due to the city’s exponential population growth which has led to the expansion of informal settlements and poor drainage systems. As a result, this situation highlights the urgent need for improved urban planning and infrastructure investment to manage flood risks effectively across the city. This challenge then presents a valuable opportunity for insurers. A notable example is the Kilimo Salama programme in Kenya. This was launched in 2010 by the Syngenta Foundation for Sustainable Agriculture, Old Mutual Insurance, and Safaricom. Through this programme, farmers who adopt sustainable agricultural practices that mitigate risks are rewarded. This has since then encouraged resilience and investment in higher-yield inputs.
A case in point is that as per the Forum for Agricultural Risk Management in Development (FARMD) 2012 brief on the success of the programme, Old Mutual Insurance collected Ksh19 million in premiums and revenue doubled to KSh33 million approximately Ushs100 million in just the first six months of 2012. This clearly elucidates the increased market engagement with the trend of ESG-driven insurance products. Furthermore, a study by Makerere University recently shared assessing solid waste management in Nakawa Urban Division. The study revealed that Kampala generates about 28,000 tonnes of waste monthly, yet only 40 percent is properly collected.
This is also another opportunity for insurers to step in with products that reward businesses for implementing recycling programmes or technologies that reduce waste. Learning from successful initiatives in South Africa, Namibia, and Kenya, Uganda’s insurance sector can position itself as a regional leader in sustainability-driven practices. This proactive approach will help bridge existing gaps in the insurance market and align with global trends towards sustainability.
Clara Splendor Kaganzi,
UAP Old Mutual Insurance Uganda Limited.
