The Insurance industry remained on a positive growth trajectory over the first six months of the year, further demonstrating the sector’s resilience amid a contracting economy due to challenging macroeconomic fundamentals.
Figures from the Insurance Regulatory Authority of Uganda (IRA) released on Thursday August 18, 2022 show that the industry’s gross underwritten premiums grew from Shs600.105 billion in the second quarter of 2021 to Shs711.63 billion in second quarter of 2022. This represented an 18.58% growth over the reporting period.
Important to note is that the industry continues to honour its obligation of paying genuine claims. The figures, for instance, indicate that Shs242.49 billion of the total underwritten premiums during the period under review, was paid out in claims. This accounted for 34.1% of the industry’s total premiums compared to 27.2% at half year, 2021.
Speaking at a media briefing at the Insurance Tower, Lumumba Avenue on Thursday August 18, the IRA Chief Executive Officer, Alhaj Kaddunabbi Ibrahim Lubega noted that the consistent growth in claims payment shows players’ increased commitment to honour their obligations.
Alhaj Kaddunabbi further noted that IRA’s core mandate remains policyholder protection, adding that a number of interventions have been instituted to ensure fair play. These include enforcement of claims guidelines, establishment of a Complaints Bureau and continuous monitoring, among others.
Life steadily claiming its rightful position
The figures further show that life insurance business is steadily claiming its rightful market position as it has continued to grow faster than the non-life business segment. Life insurance for instance grew by 32.13% from Sh183.72 billion in the first six months of 2021 to Sh242.74 billion in 2022.
The non-life segment on the other hand grew by 3.95% from Shs390.93 billion over the same period in 2021 to Shs406.37 billion in 2022.
Health Membership Organisations (HMOs) generated Shs21.97 billion over the period under review, registering a decline of 12.55% when compared to the corresponding period in 2021.
The decline was attributed to a recurrent effect of acquisition of one of the biggest HMOs – the International Air Ambulance (IAA) by Prudential Life Assurance.
The dedicated Health Insurer, which is a mono-line insurance company licensed in the third quarter of 2021, generated Shs40.24 billion as at the end of June 2022, compared to its first six months of operation (July to December 2021), where it registered Shs31.08 billion.
The Microinsurance business on the other hand posted a decline in the premiums underwritten from 335.4 million to Shs317.4 million during the period under review.
Alhaj Kaddunabbi noted that this could be a reflection of a hardening economy and the impact it has had on the population at the lowest levels of the economic pyramid.
As at end June 2022, the gross written premium collected through the brokerage distribution channel was Shs186.36 billion accounting for 26.19% of the total insurance premium during half year.
Bancassurance on the other hand, the gross written premium collected through the channel grew by 27% to Shs62.13 billion from Shs49.08billion posted under the same period last year.
Alhaj Kaddunabbi, however, expressed concern that the continued hardening of the economy, amidst challenging macroeconomic fundamentals, with heightened costs of living and reducing disposable income, could impact the demand for insurance.
He was, however, optimistic that based on the resilience the sector has demonstrated in addition to expected government releases for public infrastructure, the sector is projected to remain on a positive growth trajectory of about 15% in the next quarter, declining to about 12% by end of year. This projection is based on the assumption of continued current fundamentals.