The Insurance Regulatory Authority (IRA) Chief Executive Officer, Ibrahim Kaddunabbi Lubega, while presenting the report on Wednesday
KAMPALA — The insurance sector registered an increase in 2022, the Insurance Regulatory Authority of Uganda (IRA) has said.
Income collected from insurance premiums increased to UGX 1.42 trillion in the year 2022 from UGX. 1.183 trillion the previous year thus registering 20.4 percent growth in the industry.
This growth is nearly double the rate at which the premiums grew in 2021 at 10.61 per cent and the 2020 growth of 9.34 per cent.
During a press briefing at the IRA offices in Kampala, Mr. Ibrahim Kaddunabbi Lubega the IRA Chief Executive Officer, said the collections from non life insurance premium alone was UGX 818.7 billion in the year 2022.
Kaddunnabbi said out of the total premium income written, non- life insurance policies contributed the biggest percentage.
Non-life insurance covers property, businesses and individuals against losses.
On the other hand, Life Insurance guarantees that the insurer pays a sum of money to one or more named beneficiaries when the insured person dies in exchange for premiums paid by the policyholder during their lifetime.
Kaddunabbi attributes the growth of the insurance sector to the ongoing improvement of the regulatory environment for policyholders, insurers, brokers and agents, adding that the authority has increased public confidence in the insurance sector.
“The authority has built and continues to build confidence and trust in the insurance industry by, allowing only companies that are adequate to offer protection to enter the market or continue operations so as to protect policy holders,” he said.
We have also done regional public awareness activities as workshops, television and radio talk shows on risk awareness, insurance and its benefits, insurance markets, operations and products as well as regulatory and supervisory concerns including payment of premiums and claims,” he adds.
“We want to assure the public the Insurance Regulatory Authority will do all it takes to ensure that insurance companies do what they are expected to do,” Kaddunabbi said.
He adds that among other things they allow primary insurance to cover underwriting risks beyond their capacity and maintain their financial stability through reinsurance.
The life insurance business itself generated 485.8 billion Shillings in GWP in 2022, up from 397 billion registered in 2021, and its market share grew slightly to 34.1 per cent. The highest growth was recorded in Specialised Health Insurance, where premiums jumped from 31 billion Shillings to 81.4 billion Shillings.
However, Health Membership Organisations saw a decline in premiums written mainly because of the suspension of International Medical Link’s license by IRA leaving only two operational. Haji Lubega also says there were some losses of clients by some Health Membership Organisations to Health Insurers, hence further affecting the businesses.
Bernard Obel, the Director of Supervision at IRA, explains that International Medical Link’s failed to fulfil some obligations, especially regarding its financial strength among others, leading to its suspension in September last year and subsequently ceasing offering the services.
There was also a decline in business under the micro-insurance services, which largely serve low-income earners, with some products allowing one to deposit as little as 1,500 Shillings at a time. Gross premiums written under this amounted to 611 million, down from 657 million Shillings, the decline being attributed to harsh economic conditions that mainly affected the lower earners.
This, according to the CEO is one of the main challenges because the low-income earners need insurance more than the richer communities, the reason the insurance companies are being encouraged to innovate in low-cost products and making transaction costs lower.
As of the end of 2022, more than 2.475 million Ugandan individuals and corporates were covered in one way or another, meaning that 4.5 per cent of the population had a form of insurance. It also means that on average, every Uganda is now insured to a total of 31,315 shillings, up from 28,059 Shillings in 2021.
During the year, a total of 618.7 billion was paid out to successful claimants, compared to 564.8 that was paid out in 2021. The IRA was particularly excited at the performance of agriculture insurance which is subsidized by the government, where 374 billion shillings was insured.
By the end of the year, according to records, some 665,000 farmers were insured to a cumulative total premium of 2.2 trillion Shillings. Over the year, 11.4 billion Shillings were collected in gross written premiums while 8.8 billion Shillings were paid out to farmers who incurred losses in different forms.
Kaddunabbi said they are urging the government to increase the subsidy from the current annual five billion Shillings so that the farmers can insure their crops throughout the year.
