Positive outlook for insurance sector but some players face uncertain future

Over the past financial year, Uganda’s economy grew much faster compared with the previous year. The Gross Domestic Product expanded by 5.8% in real terms, 1.9 percentage points higher than the outturn for Financial Year 2016/17 of 3.9%. This is expected to improve further into 2019 based on continuous improvement in the global economy.

Also, successful implementation of local marine insurance purchase could also see the insurance industry record huge premiums on imports.

This comes as the country’s insurance market is projected to record a 12% growth in insurance premiums to Shs825bn in 2018.

This is nearly triple the amount of premiums earned in seven years ago though less than Kenya’s Shs7.2trillion and South Africa’s Shs172trillion.

The projected growth in insurance premiums is to be driven by increased uptake of agriculture, medical, infrastructure, oil and gas insurance policies as well as widened insurance distribution channels.

So far, 15 commercial banks have been offered licenses to operate as bancasurance agents since November 2017.

Meanwhile, in the area of agriculture, it is expected that the popular Kungula product which was launched in 2013 by a consortium of 10 insurance firms, targeting crop, livestock and fish farmers will be the silver bullet for its growth.

Also, government was and continues to be a major client through development projects among them is ongoing construction of 183MW Isimba and the 600MW Karuma Hydropower Dams; the Standard Gauge Railway and the USS$1bn (95km) Jinja-Kampala Expressway.

Another hope is in the oil and gas sector where insurance players are eying opportunities.

It is anticipated that investments in the region of Shs56trillion-75trillion will be made in the next two-four years ahead of oil production in 2023.