Uganda's Insurance Premiums Up 18.5 Percent to Shs711.6bn

Insurers in Uganda have recorded an 18.5% growth in gross written premiums for the six-month period ending June.30 to Shs 711.6bn.

Results released in Kampala on Aug.18 indicate that the non-life insurance business generated Shs406.37bn as the life insurance business generated Shs242.7billion.

The Health Membership Organisation and a dedicated health insurer generated Shs21.97bn and Shs40.24bn during the same period under review.

"This growth is a statement of resilience in a contracting economy as a result of a challenging environment," said Ibrahim Kaddunabbi, the Chief Executive Officer of the Insurance Regulatory Authority of Uganda.

Like most developing countries, Uganda's economy has been battered by a difficult economic environment, characterized by increased inflationary and currency pressures.

This has been largely influenced by higher fuel prices, rising domestic food prices due to dry weather conditions across the country, as well as persistent global production and supply chain challenges.

Gross claims paid on account of both life and non-life insurance business including HMOs stood at Shs242.5billion, signaling increased commitment of players to honor obligations.

Micro-insurance business generated Shs317million, representing a 5.4% reduction compared to the same period last year, demonstrating a hardening economy and the impact it had on the population at the lowest levels of the economic pyramid.

In terms of market concentration, non-life insurance accounted for 57% of the aggregate industry written premiums, 2.7% points lower than the market share index of 59.8% in the corresponding period of 2021.

On the other hand, life business accounted for 34% of the aggregate industry written premiums, 0.86% points higher than the market share of 33% in the corresponding period.

Bancassurance growth

Insurance services sold through commercial banks commonly known as bancassurance recorded an increase in insurance premiums from Shs49bn to Shs62bn.

Also, gross written premiums collected through the brokerage distribution channel stood at Shs186.3bn, accounting for 26% of the total premium during the half year. Brokers are critical players in the market as they play a critical role in providing expert, value-adding advice on risk management to their clients.

Kaddunabbi also revealed that the regulator has operationalised the Insurance Appeal Tribunal, digitalisation of insurance complaint management of the complaints bureau, operationalisation of the localisation of marine insurance, and the initiation of the process to operationalise IRA's regional establishments.

Resilient market

Kaddunabbi said, whereas the economy continues to harden amidst the challenging macroeconomic fundamentals with heightened costs of living and disposable income, they project the industry on a positive growth trajectory of about 15% in the next quarter, declining to about 12% by end of the year.

Last year, the country's insurance industry recorded gross written premium growth of 10% to Shs1.18trillion driven by enhanced distribution, customer confidence, risk awareness, and a growing middle class.

Non-life insurance business recorded an increase in gross written premiums from Shs665billion in 2020 to Shs706billion last year while life business increased from Shs324billion to Shs391.7billion during the same period under review.

Comparatively, non-life insurance businesses contributed 59.8% to the aggregate industry written premiums, 2.5 percentage points lower than the market share index of 62.4% in 2020.

On the other hand, the life insurance business accounted for 33.2% of the gross written premiums, 2.8percentage points higher than the market index of 30.4% recorded in the previous year.

The country's insurance market boasts of two reinsurance companies, 21 non-life players, eight life companies, two micro insurance companies, and three Health Membership Organisations.