Uganda’s insurance industry registered robust growth rate in 2023 on the back of enhanced insurance customer confidence, improved distribution channels, and growth in online transactions.
Statistics released by the Insurance Regulatory Authority of Uganda (IRA) at a press briefing on July 4, indicate that the industry’s gross written premiums grew by 11.29% in 2023 from Ugx.1.44 trillion in 2022 to Ugx.1.6 trillion during the period.
Speaking during a press briefing at the Insurance Tower, the IRA Chief Executive Officer, Alhaj Kaddunabbi Ibrahim Lubega said enhanced claims payment, consumer empowerment and strengthened complaints redress mechanisms provided by the Authority has increased customer confidence in the sector, leading to increased uptake of insurance services.
IRA’s Complaints Bureau realised an increase of above 40% in the number of received complaints due to enhanced awareness creation in the industry, which has seen many complainants coming to enforce their rights.
The other factors that led to industry growth in the industry’s gross written premiums were acceleration in demand to transact online, enhanced distribution channels, and growth in Uganda’s middle-class population.
Of the Ugx. 1.6 trillion total underwritten premiums, the non-life business segment generated Ugx.932 billion, up from Ugx.898 billion in 2022 while the life insurance segment generated Ugx.611.4 billion compared to Ugx.501.6 billion in 2022.
Health Membership Organizations generated Ugx. 56.3billion of the gross written premiums, up from Ugx. 38.2 billion in 2022 while microinsurance generated Ugx. 0.707 billion, up from Ugx. 0.611 billion in 2022.
Life insurance regaining
In terms of market share, life business segment accounted for 38.14% of the aggregate industry written premiums, representing 3.32 percentage points higher than the market share index of 34.82% in 2022. This compares to 58.14% of the aggregate industry written premiums for non-life, representing 4.20 percentage points lower than the market share index of 62.34% in 2022.
Despite this, the statistics show that the life business segment continued to grow faster than the non-life segment, at 21.9% compared to 3.8% growth recorded by non-life. This, Alhaj Kaddunabbi says means that the life business segment is regaining its rightful position and the target is to have 70% of the industry’s gross written premiums contributed by life business.
He noted that growing the life insurance segment is essential for Uganda as the collected premiums provide the needed long-term funds for investment.
“The faster rate of growth in life indicates a positive trend towards individuals prioritizing long-term financial security and protection,” he said.
He added: “This shift suggests that people are increasingly recognising the importance of safeguarding their futures and that of their loved ones, reflecting a growing awareness and readiness to invest in comprehensive financial planning and security measures.”
Health Membership Organisations on the other hand grew faster at 47.24%. Alhaj Kaddunabbi explains that this shows that people are slowly shifting from paying for medical services out-of-pocket.
“This is promising; we will support it further by making new interventions to increase the uptake of medical insurance,” he pledged.
Double-digit growth expected
Alhaj Kaddunabbi is optimistic that 2024 will be even better because inflation has been contained at an average rate of 3.2% in 12 months leading to May 2024, while the annual headline inflation reduced from the peak of 10.7% in October 2022 to 3.6% by May 2024.
He noted that this stable macroeconomic environment provides a good investment climate and impacts positively on people’s purchasing power.
The other factors projected to support sector growth are public sector construction-related investments in the first half of 2024/25, innovations such as marine insurance and enhanced public trust, among others.
More claims paid
The statistics further indicated that the industry continues to honour genuine claims. Ugx. 820.47 billion was paid out in claims in 2023, up from Ugx. 618.71 billion in 2022, representing 51.17% of the total gross written premiums. Ugx. 564.82 billion was paid in 2021.
According to Alhaj Kaddunabbi, efficient insurance claims payment is crucial to ensure policyholders receive timely financial support when they need it most, fostering trust, satisfaction, and a reliable safety net against unexpected events.
He noted that IRA instituted measures for zero-tolerance for non-payment of legitimate claims and this has greatly contributed to the growth in claims payment.
In terms of distribution, the brokerage channel is still the most used by the insuring public. Premiums collected through this channel increased to Ugx. 541.22 billion compared to Ugx. 453.51 billion in 2022. Ugx. 179.48 billion was collected through the bancassurance channel during the period under review, up from Ugx.142.70 billion in 2022. This represents a 25.77 percentage growth. This growth, according to Alhaj Kaddunabbi, reflects the great potential that mutual partnerships offer.