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INSURANCE SECTOR POSTS STRONG GROWTH IN 2022

Uganda’s insurance sector recorded a year of strong growth of 20.4% in 2022 compared to 10.61% in 2021.

Statistics released by the Insurance Regulatory Authority of Uganda (IRA) show that the sector’s Gross Written Premium (GWP) grew from UShs1.183 trillion in 2021 to UShs1.425 trillion in 2022.

The IRA Chief Executive Officer Alhaj Kaddunabbi Ibrahim Lubega told a media conference at the Insurance Tower in Kampala recently that the impressive growth is evidence of the recovery of business activity from the effects of the Covid -19 pandemic.

The performance figures show that the non-life insurance business contributed UShs818.7 billion of the industry’s GWP during the period under review while life generated UShs485.8 billion.

Health Membership Organisations (HMOs) generated UShs38.3 billion, down from 48.3billion in 2021, representing a 20.7% decline.

The decline was attributed to the exit of IML and loss of some clients to health insurers due to an increase in premium at renewal arising from the previous poor loss experience.

The specialist Health Insurance Company generated UShs81.4 billion from UShs31.08 billion written in half of its first year of operation in 2021. This represents a 162% growth.

Microinsurance companies on the other hand generated UShs0.611 billion marginally reducing from UShs0.657 billion in 2021. This accounted for 2.7% of the market share compared to 4.2% in 2021.

Alhaj Kaddunabbi noted that the reduction may be attributed to competitive pressures on incomes especially at the lower income pyramid brought about by increasing costs of living.

He said that owing to the critical importance of this segment, the Authority will continue to examine this area to identify key interventions.

It is also important to note that the sector continues to pay genuine claims as released figures showed that the Gross Claims paid on account of both life and Non-life increased by 8.2% from UShs564.8 billion in 2021 to UShs618.7 billion.

Penetration increases

Uganda’s insurance penetration improved by 0.08% from 0.796% in 2021 to 0.876% in 2022.

Alhaj Kaddunabbi, however, noted that penetration continues to be depressed by the spread effect of double rebasing of the National GDP over the last 10 years.

Insurance density – a measure of the extent of insurance deepening – also increased from UShs28,059 to UShs31,315, representing an 11.6% growth over the year.

Agriculture insurance

During the year, a total of 316,496 farmers were covered and generated UShs11.4billion in GWPs to the Industry for the insured sum of UShs372.2 billion. A total of UShs8.75billion was paid in claims on the account of losses suffered in agriculture.

This, he said, brings the cumulative number of farmers to 665,240, and cumulative sum insured of UShs2.3 trillion. The cumulative total of paid claims over the scheme period is UShs32.6 billion.

Channel contribution

During the year 2022, UShs480 billion was collected through the brokerage distribution channel, up from UShs412.6 billion generated in 2021.

The bancassurance channel on the other hand generated UShs142.7 billion compared to UShs103.5 billion in 2021.

Important to note is that the sector’s net assets also increased from UShs834.3 billion in 2021 to UShs924.2 billion in 2022, representing 11% increment. This means that the sector is strong enough to absorb risks.

Achievements

Alhaj alluded that 2022 was an eventful year for the sector, where several milestones were registered including operationalisation of the Insurance Appeals Tribunal, partnering with Innovation Village to promote activity in the Authority’s Insurance Regulatory Sandbox and the development and launch of the online Complaints Management system.

Additionally, the Authority acquired a regulatory reporting software which will aid in reporting, licensing, risk-based supervision and developed the Mortality Table for Uganda.

Bright future

Alhaj Kaddunabbi is optimistic that  life, enhanced risk awareness, marine insurance as compliance improves, medical insurance, emerging sector opportunities especially in Oil and Gas and growth in premiums from Agriculture as agriculture insurance gets incorporated in the Parish Development Model (PDM), will drive insurance growth this year.

He noted that in the short-to-medium term, more attention will be paid to claims and claims processes to ensure that all payable claims are paid in time.