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02 Mar 2020

INSURANCE INDUSTRY AND THE YEAR 2019

The year 2019, witnessed the insurance sector transform with numerous regulatory changes greatly contributing to the positive growth of the sector. The sector recorded a 13.6% increase in the gross written premiums to Shs748bn according to figures obtained in the last nine months of 2019.

The industry’s non-life insurance premiums increased from Shs452.6bn to Shs 490bn while life written premiums increased from Shs150bn to Shs 199.57bn.

Our desire at the Insurance Regulatory Authority of Uganda is to ensure that the insurance sector is financially sound, vibrant and trusted. The supervisory role has in the year 2019 been greatly based on three pillars; 1) Regulatory discipline, 2) market conduct and 3) Encouraging self-discipline among the regulated insurance players.

After the commencement of the Insurance Act 2017, which created the supervision of insurance business on a risk-sensitive basis, we have been in the position to develop 10 Regulations which are soon going to be gazetted. Special attention has been given to developing regulations for the Mobile Insurance, Microinsurance, Licensing, Governance and Market Conduct, Payment of Premiums, Reinsurance, Capital Adequacy and Other Prudential requirements among others. The regulations are all focusing on a broad range of enforcement tools but most importantly with the aim of further protecting and safeguarding the interests of policyholders and stakeholders.

The new regulatory regime continuing in 2020 will require highly flexible data models, with Actuarial professionals ready to create a convergence process, which will demand technological solutions and enable business investors to forecast their financials.

Technological disruption is an all-embracing agenda which we will continue in 2020. It has played an increasingly prominent role in almost every phase of the insurance company operations, changing from how insurers have been marketing their products, managing their customers, how they plan to execute their business strategies. Therefore, for insurers to survive and thrive in the digital age, they will need to be more responsive, factoring in the shift in distribution channels and becoming more collaborative with their customers.

Whereas there is going to be more competition from new market entrants especially the Insurtechs /Fintechs, combined with new rules on capital and solvency, this will make it more crucial than ever before for the insurers to identify any opportunities and allocate capital to generate the highest returns.

In this context, the Authority has undertaken several initiatives and programs during 2019 to maximize the efficiency of the insurance sector and provide the best insurance service to policyholders, beneficiaries and the entire public to enhance competitiveness in the region.

Engaging with the insurance companies, the insurance professional, Insurance Training College, and the insurance trade associations, all have created awareness of the insurance services.

The Insurance Regulatory Authority in collaboration with the Uganda Revenue Authority and the Uganda Insurers Association, have instituted a technical working group to implement the local marine cargo goods strategy. An e-portal system for the local marine cargo /goods in transit insurance has been developed. Effective 1st March 2020 there shall be voluntary marine insurance provided locally by insurance companies licensed by IRA and compulsory local purchase shall take effect on 1st June 2020. The importers using the system will benefit with more favorable tax compensation by URA.

What makes us optimistic is that with the early outlook of the sector, the challenges experienced in 2019 are all presenting opportunities for the sector growth and thus achieve the IRA’s goals.

Our agenda in the coming years is to have a digitalized system of operation. Recently we launched a digital payment platform making it easier for vehicle and motorcycle owners to purchase compulsory Motor Third Party Vehicle Insurance using their phones. This will improve the claims process and reduce fraud, trace payments and improve access to motor third party insurance.

Whereas consumer awareness deficit is still a challenge, we believe that customer service and customer experience are becoming an important competitive differentiator for the sector. The Authority has established successful relationships between insurers and customers. Companies are now focusing on meeting consumer demands during each phase of the customer journey, and that is why we observe new innovative products coming on the market.

As we begin 2020, we are committed to openly communicating our development priorities to all stakeholders and the wider public, so that everyone gets the opportunity and ability to be an active participant in the growth of the insurance sector.

We believe that your expectations are in part to provide greater confidence in the insurance sector, so we encourage you to openly engage us. We look forward to working with all stakeholders, pertinent sectors and all other interested parties as we embark upon the next phase of our insurance supervision.

Alhaj Kaddunabbi Ibrahim Lubega

Chief Executive Officer

Insurance Regulatory Authority of Uganda

[email protected]