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The projected total Gross Written Premium at the end of year 2022 is Shs1.3tn supported by a strong economy according to industry regulator
Kampala, Uganda | THE INDEPENDENT | Uganda’s insurance sector has remained on a positive growth trajectory in the third quarter of 2022, with the total gross written premium growing from Shs 912billion in quarter three of 2021 to Shs1.08trillion in quarter three of 2022, posting 18.57 percent growth over the same reporting period, the regulator said on Nov.21 at its head offices in Kampala.
“This growth is a statement of resilience in a contracting economy as a result of challenging macroeconomic fundamentals, characterised by double digit inflation,” said the Chief Executive Officer, Kaddunabbi Ibrahim Lubega.
Kaddunabbi said, non-life business generated Shs632.3billion of the total gross written premium in quarter three of 2022, growing from Shs528.8billion on quarter three of 2011. This represents a 19.58 percentage growth.
Life insurance business on the other hand generated Shs351.3billion growing from Shs291.6billion in quarter three of 2021. This represents a 20.46 percentage growth.
HMOs generated Shs33.04billion, down from Shs35.9billion in the corresponding period in 2021. This represents a 7.97percentage decline.
The significant decline remains a recurrent effect of acquisition of one of the biggest HMOs that is, IAA by Prudential Life Assurance.
The dedicated Health Insurer which is a mono-line insurance company licensed in the third Quarter of 2021 generated Shs 64.3billion, growing from Shs 55.2billion in the same period in 2021, representing a 16.5 percentage growth.
Microinsurance business generated Shs468million compared to Shs505million generated in the corresponding period in 2021, representing a decline of 7.33 percent.
Kaddunabbi said, this was in part attributed to hardening economic times as inflation continues to make it hard for the population at the lowest levels of the economic pyramid to save.
In terms of market concentration or composition, non-life accounted for 58.5% of the aggregate industry written premiums while Life business accounted for 32.5percent of the aggregate industry written premiums in the reporting period.
The rest of the classes combined (HMOs, Dedicated Health Insurer and Microinsurers) accounted for 9percent of the aggregate premiums underwritten.
Claims and brokers’ performance
The regulator said, their core mandate remains policy holder protection and ensuring that legitimate claims paid remains high on their priorities.
A total of Shs476.52billion was paid out in Gross Claims during the period, accounting for 44.1 percent of the industry’s total premium. This is as compared to Shs363.15billion which was paid in quarter three of 2021.
“The consistent growth in claims shows increased commitment of players to honour their obligations,” Kaddunabbi said.
Meanwhile, as at the end of September 2022, the gross written premium collected through the brokerage distribution channel was Shs367.6billion accounting for 27.5 percent of the total insurance premium during the third quarter of 2022.
The regulator said, brokers remain critical players in the market as they play a critical role in providing expert, value-adding advice on risk management to their clients.
“We shall continue to implore brokers to sell their value propositions to the consuming public so as to increase their share,” said Kaddunabbi.
Bancassurance
During quarter three of 2022, the gross written premium collected through the Bancassurance distribution channel was Shs102.44billion compared to Shs 74.73billion in September, 2021 representing a 37.0 percentage growth and an overall contribution of 9.47 percent to total industry premium.
Industry players say, there is a marked increase in adoption of the Bancassurance Channel as a one-stop centre for financial services. This is expected to continue growing in the foreseeable future.
Going forward, the regulator says, macroeconomic fundamentals are not yet favourable as inflation remains in double digits affecting the purchasing power of money and constraining savings. This, according to IRA, will continue to inevitably impact on demand insurance which is not yet a priority for most Ugandans.
“Whereas we had projected a 15 percent growth for quarter three based on the anticipated constraints, 18percent was actually registered. We now therefore revise the end of year growth from the earlier projected rate of 12 percent to 14.2 percent,” Kaddunabbi said.
The projected total Gross Written Premium at the end of year 2022 is Shs1.352 trillion – this projection is based on the assumption of continued current economic fundamentals.
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