Insurance provides an important financial safety net, hedging against the risk of a contingent or uncertain loss (Insurance Regulatory Authority of Uganda – IRA). Although the concept of pooling resources to mitigate uncertainties or calamities such as healthcare expenses, education, floods and famine has been practiced by most communities in Uganda, modern day insurance is largely underdeveloped presenting boundless opportunities for improvement. Insurance penetration remains at below 1% compared with South Africa (16%) and Kenya (3.4%).

The beginning of the Uganda’s insurance industry dates back to the late nineteenth century with insurance written by branches of foreign companies which were mainly British, American and Indian. In 1948, the first local insurance company, East Africa General, was formed. This was followed by the then fully state-owned National Insurance Corporation (NIC) in 1964. In 2017 a new Insurance Act, (Insurance Act, 2017) was enacted and IRA started licensing banks as Bancassurance Agents following the amendment of the Financial Institutions Act.

Uganda has experienced steady growth in her insurance market. The number of licensed players in the industry, insurers (both life and non-life insurers), insurance intermediaries (such as brokers, agents, risk advisors, loss assessors, bancassurance agents, third party administrators and reinsurance brokers) has grown from eighty-six (86) in 2014 to a hundred and thirteen (113) in 2019, an 131% growth in five years. The aggregated industry Gross Written Premiums (GWP) have continued to grow from UGX 463 billion in 2013 to UGX 1064.9 billion in 2020, a 230% growth in seven years. The Health Maintenance Organizations (HMOs) experienced growth from 56 UGX billion in 2013 to 75.5 UGX billion in 2020 but the growth rate slumped from 30.9% in 2018 to 10.1% in 2019 to a negative growth rate of -0.7% in 2020. The three leading HMOs by market share are the International Air Rescue (42.8%), AAR Health Services (40.33%) and International Medical Link (9.32%)

A growing middle-class with disposable income and improvement in risk cautiousness amongst the population as a result of increased public sensitization campaigns by the various insurance sector stakeholders, provided a consumer base for the various insurance products. Steady growth in the insurance industry has also been driven by an increased demand for personal accident and health insurance and a rise in large infrastructural projects in the country. Individual life insurance is the fastest growing market sector and has realized consistent growth from 2012 to 2020.  Similarly, deposit administration has also enjoyed steady growth. Group life and medical insurance have experienced volatile trends in GWP movement over the last three years.

The Insurance industry has remained on a positive growth trajectory despite numerous challenges brought about by the COVID 19 pandemic. The Geneva Association’s The Global Risk Landscape after COVID-19: What role for insurance, identified four important transitions that companies will face as a result of the pandemic: strengthening digitization in insurance, growing the role of the public sector, shifting towards sustainability with governments committed to ‘building back better’ and embracing a remote workforce. IRA is promoting the transformation of insurance operating and business models through investment in artificial intelligence, machine learning and other innovations in order to make the insurance value chain robust, efficient and streamlined.

References:

Opportunities and challenges to innovation in the Ugandan insurance market, June 2021

COVID-19 Impact Survey for The Insurance Sector IN UGANDA. IRA, October 2020

Annual Insurance Market Report 2020, IRA

Insurance Outlook Report 2020/21, East Africa, November 2020, Deloitte