28 May 2020


By Sheebah Ddungu Nalwebuga - Market Development Officer, IRA Uganda

The average Ugandans still perceive insurance as being expensive, a service for the few rich individuals, a luxury, and an investment among other notions. In the past, low-income individuals have felt that they cannot afford premiums or fees because they lack regular jobs, or because they cannot read or write and as such, have not embraced insurance services. However, this trend has since changed, and now more than ever insurance companies are developing and selling insurance services to all regardless of their social status.

According to the annual Insurance market report of 2018, Gross Written Premiums increased from UGX 728.53 billion in 2017 to UGX 856.22 billion in 2018, representing a 17.51% growth. This was attributed to a number of efforts made by different insurance players to design policies that generally address the needs of the clients, clear and more flexible with premiums, thereby making it affordable to the low- income communities. The growth in the premiums is still skewed towards middle- and high-income clients. However, there are clear opportunities to have insurance penetration and uptake improve over the years by focusing also on those at the low-income pyramid.

Microinsurance has registered significant success in Africa and Asia. According to the International Labor Organization Impact Insurance, in Africa, micro insurance has been growing at an average of 200% over the last 5 years. In Uganda, there are great hopes since in 2018, the first microinsurance company registered a total of Shs24.32 million in premiums. In the year 2020, a second microinsurance company has been licensed. Could Micro insurance then be the solution to the needs of this untapped segment of Uganda’s population? According to Kevin Hogan, CEO of AIG Global Consumer Insurance, “Microinsurance is not only a viable business but one that presents a unique opportunity to serve individuals and small business owners who don’t typically have access to our world-class products and services.”

The revised National Household Survey published by UBOS in February 2018 indicates that 21.4% of Ugandans are living in poverty. Microinsurance, therefore, presents an opportunity as a means of protecting low-income people against specific risks in exchange for a regular payment of premiums whose amount is proportional to the likelihood and cost relevant to the risk. Potential clients with little savings stand to benefit from microinsurance in case of illness, injury or death.

A case in point is Mr. Mugerwa Charles, who is a member of Century Boda-boda Motorcycle Association who benefited from his local insurance scheme where he was contributing a premium of as low as UGX 6000 per month. In May 2019, he was involved in an accident that left him injured and his motorcycle damaged. After reporting to the insurance company, he was compensated and he now has a new motorcycle. Had he not been insured; his family would have suffered greatly since he is the breadwinner in the home.

It is imperative to note that more than any other group of people in the community, poor people are the most exposed to risks yet they are the least capable of handling the associated consequences. Low-income earners are exposed to risks such as illness, death, disability, property loss, risk of loan among others. Let us face it, all of us are likely to face uncertainty at any given stage in life, the question is how prepared are you?

The insurance market in Uganda today has developed and innovated various products with key features that include; coverage ranging from 24 hours to 30 days, premium coverage for as low as Shs1300 per month, and accessible on our phones.

With the various fatal accidents registered each year, Insurance companies have designed policies for the low- income Boda-Boda cyclists providing compensation of up to shs.1 million in case of death, disability, critical illness or medical expenses resulting from bodily injury and illness sustained as a result of an accident. Such policies are also providing up to Shs.500,000 for funeral expenses.

Let us take full responsibility of ourselves, let’s embrace micro insurance and help those who have not appreciated its benefits.