Sanlam Targets to Boost Market Share in Uganda

Nairobi, May 12, 2010 (The East African/All Africa Global Media via COMTEX) -- Sanlam Group, South Africa's second largest non-banking financial services provider has joined Uganda's life insurance market.

The firm will provide life insurance services under its local subsidiary, Sanlam Life Insurance Uganda Ltd, thereby increasing the country's life insurance providers to six.

Other players in the country are National Insurance Corporation, Jubilee Insurance Ltd, UAP Uganda Ltd, Insurance Company of East Africa (ICEA) and Liberty Life Assurance.

Liberty Life Assurance has been the country's sole life insurance provider while the rest are composite insurers with both general and life cover portfolios.

Though life insurance premiums account for less than 10 per cent of total premiums collected per year in the Ugandan market, growth has been fairly impressive since 2006. According to figures from the Uganda Insurance Commission, total industry premiums are currently estimated at over Ush125 billion ($60 million).

Market penetration however, remains very low at 0.56 per cent.

In 2007, total life insurance premiums grew by 95 per cent to Ush11.3 billion ($5.4 million). This contrasts sharply with 12 per cent growth in 2006 when total life premiums reached Ush5.8 billion ($2.8 million).

In comparison, general insurance premiums accounted for 94 per cent of total premiums in 2007, equivalent to Ush117 billion ($56 million).

Sanlam's entry into Uganda is part of the firm's plan to deepen its regional presence. With prominent subsidiaries in both Kenya and Tanzania, the group expects to consolidate market share and profitability in East Africa's relatively underexploited insurance sector.

The company's market strategy is to provide group and individual life insurance products in view of the rising urban population.

"The life insurance market is very small but there is a lot of untapped potential. Families are getting smaller as they move to urban centres and this creates new challenges.

For instance, family heads die and leave their households in debt. Our life insurance products cater for funerals, disabilities and debt burdens," said Robert Dommisse, the general manager for structural growth and developing markets at Sanlam Group.

The company also plans to introduce long term savings products for education needs, retirement savings and funeral insurance covers.

Healthcare insurance products are also expected in line with prevailing market conditions.According to Heinie Werth, the chief executive for developing markets, the firm's products are based on similar offers available in the South African market and target middle class clients.The products range from $1,000 to $2,000 per year.

Building partnerships

Sanlam plans to build solid partnerships with banks, telecommunications companies and major retail chains alongside formal insurance agents in an effort to deepen product penetration.

Proposed changes in the Insurance Act of 2004 are expected to legalise bancassurance products - insurance products sold by banks in addition to higher capital requirements.

However, Sanlam is concerned about distribution system challenges in Uganda where many agents prefer selling general insurance compared with life insurance products coupled with poor risk management practices, according to Mr Dommisse.

Apart from its new Ugandan subsidiary, Sanlam Group holds a 50 per cent stake in Pan Africa Insurance Holdings Ltd which wholly owns Pan Africa Life Ltd of Kenya, the country's second largest life insurer.

The company boasts of a market capitalisation of $36 million on the Nairobi Stock Exchange.It also owns 65 per cent shares in African Life Assurance Tanzania Ltd which started operations in 2005 and is ranked second largest in the country's life insurance market.