With a mere 0.85 per cent sector penetration, Uganda’s insurance industry, that has in the past been labeled stagnant, still remains fitting of that description. Stuck at 0.65 per cent between 2008 and 2012, penetration increased to 0.85 per cent in the year 2013 after health membership organisations were brought under the supervision of the Insurance Regulatory Authority, and perhaps it will now stick there, having only recorded a minor increase to 0.86 per cent in 2014.
In fact, even with this increase, Uganda’s insurance penetration still remains low when compared with regional counterparts such as Rwanda (1 per cent), Tanzania (2.3 per cent) and Kenya (3.8 per cent). This raises the age-old question: Why won’t Uganda’s insurance penetration hit even a mere 1 per cent?
A case of minimal creativity
Speaking to Daily Monitor about their recent leap to fourth position in industry market share, having been seventh five years ago, Mr Newton Jazire, the managing director Lion Assurance, emphasised that a great chunk of their success is attributed to their innovation and creativity, an aspect he says is lacking among many players.
“Our core competence as Lion Assurance has been innovation. We pioneered agriculture insurance through our ‘Kukungula Agri-insurance’ product, introduced the ‘Wekume boda-boda insurance’ and even SACCO products which are meant to cater for the low-income earners that form the wider base of our economy,” Mr Jazire explains.
He is of a view that it is the same aspect of creativity that has a big hand in the low insurance penetration in the country. For instance, many other players have been keen on packaging products for the rich and affluent, and perhaps simply ignoring the fact that Uganda’s population is majorly composed of the low-income earners.
“Beyond that, some are sticking to the traditional products like fire and motor insurance, and only using price-cuts as an attraction factor; yet this is a time when we need to be thinking out of the box and coming up with new and better tailored products if we are to attract many more Ugandans to take up insurance covers.”
Many more factors
Ascertaining as to whether the 29 licensed insurers in the country are innovative enough or not may be a futile fact-finding mission given that the Insurance Regulatory Authority (IRA) does not maintain data on the number and nature of innovations brought forth. Nonetheless, Ms Mariam Nalunkuma, the IRA spokesperson, refutes the idea that creativity is a problem among Uganda’s players, especially today.
“Yes, it is right to say creativity was an issue in the recent past. Today, however, insurance players are getting more creative, and this can be seen from the increased frequency in regard to the number of times IRA is approached to license new products every month,” Ms Nalunkuma says.
She holds the view that the factors still keeping insurance penetration at bay are those that have for long been known; majorly the low disposable income for many Ugandans and the fact that majority of the population has failed to appreciate insurance.
Way forward
There is no denying that a big number of Ugandans still do not appreciate the significance of insurance. This coupled with the widely publicised reports of insurance companies not paying claims do not help the situation. Perhaps it is for this reason that Ms Nalunkuma says the insurance industry as a whole, needs to channel more effort toward mass-sensitisation strides starting from schools.
“Focus should not only be put on the rich but even the poor and most certainly the younger population,” she advises.
Mr Muli agrees with this approach, saying it is time for the government to come up and add their voice.
“People tend to believe the government more, which is why government needs to show full support to the whole idea of insurance covers if Ugandans are to buy into it.”
But even with such effort, the rest of the journey may be left to play out with the economy because, as Mr Jazire notes, insurance resonates with the level of the economy in terms of development.
Nonetheless, he maintains that insurance players will still need to get a tad more creative, not just with products but even the insurance marketing strategies.
“The buying methodology has gone digital. People want to use their phones and we are going to have to drop the traditional paper work and put much more emphasis on the option of offering insurance online,” Mr Jazire says.
government to blame
Similar sentiments are echoed by Mr Jackson Muli, the chief executive officer ICEA Life Assurance, who does not entirely agree that creativity has been much of a contributing factor in the continued low penetration of the insurance industry in the country.
He instead brings government’s contribution under scrutiny, saying the government has not done enough to help insurance players increase penetration.
“In other countries like Kenya and South Africa, incentives have been given, for instance if someone buys a life assurance policy, that amount is not taxed, which is not the case for Uganda,” Mr Muli notes. He follows the same verbal stride to point out that the government has even failed to lead by example since government cars are excluded from third party motor insurance.
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