Scaling up the insurance industry

By Agnes E. Nantaba

Newton Jazire is the managing director of Lion Assurance Company Ltd. He spoke to Agnes E. Nantaba about their operations and pertinent issues in the insurance industry in Uganda.

What are the key elements in your management philosophy as a manager?

Management is about the people; the most important resource in our business and the most priced asset are the people. As a manager, it is my role to ensure that the team understands where we want to go, what we want to achieve, their contribution in the whole equation as well as their impact on other people’s skills and once every team member understands their contribution, it’s easier to move without working under pressure. In terms of execution of work, I am 100% of a manager of delegation because I don’t believe in doing things for people and end up making them redundant.

What is your assessment of the performance of the insurance industry in Uganda?

The future for the insurance industry is very bright. Ugandans have not been trusting insurance for a very long time which dynamic is changing because of the emergence of the middle class economy in Uganda. This leaves people with some disposable income to spend on insurance as insurance does not make it on the list of priorities for many individuals.   The insurance industry is currently more regulated just like banks and it’s no longer an industry where an individual claims are denied without any authority doing the follow up. From all the increasing Foreign Domestic Investments (FDI’s) in the country and the infrastructure development from government projects, come with different insurance covers. The good development is that for the international companies that come into the country, even the local ones are forced to insure because it’s a requirement for them to partner or work with them.

The Ugandan insurance industry is struggling with low penetration which highlights poor public perception of the industry. What is your strategy towards mitigating this as an industry?

The level of penetration in the market has been 0.65%, which has grown to 0.85% of the total GDP of the country. The issue however is that the GDP grows at a faster rate than the insurance industry. The industry itself is growing but maybe at a slower pace that what it should be. From a percentage point of view, the total premiums as a percentage of GDP remain less than 1% because the GDP is much higher.

You recently unveiled Kungula as an agricultural insurance initiative in a sector that is largely neglected. What has been its reception in the market?

It has not grown as per our targets even when it’s about to make two years. The whole problem about Kungula is that the literacy level of some farmers is quite low; explaining the technical bits of the product is quite complicated yet it targets the whole chain from preparing the land to the market with an aim of guaranteeing family income. We are however working with development partners to break down Kungula into the different local languages.  The government also put Shs 5billion towards agricultural insurance having demonstrated that it has worked in other countries like India where government subsidized premiums for their people for some time and after they realize how it works, they can walk on their own and pay full premiums. Then, they will start to pay for insurance like they pay for fertilizers and seeds.  We have had a few projects running although it’s not the numbers we had anticipated. If the people who drive cars can fail to insure, how about the farmers who may be illiterate about insurance? It is slightly behind where we wanted it to be but it’s not a Lion product alone as there are eight insurers in this same project. More insurers are willing to come on board as we work to have a national insurance consortium.

What other initiatives have you put in place to grow the insurance products portfolio in the market?

There are quite a lot of products that we are developing tailored for the lower end market. These are meant to include all people to the whole equation of insurance. Even when you talk about legal guard, it’s a product that is working well in other countries but in Uganda, traditional people still believe in settling issues out of court but whether it will still go on is debatable.

There are public claims about poor claims settlement by insurance companies in Uganda. How do you ensure an efficient claim settling process?

We pay billions in claims settlement. For instance last year alone, Lion Assurance paid out Shs 9billion in claims but the public do not get to know about such good things. We have a fast track system where claims of Shs 5 million and below are cleared or paid in less than 24 hours depending on the magnitude of the damage. If you lose a phone and need a replacement, it does not take a day because you have reported to the necessary authorities and pay your premiums. The unfortunate bit is that the good stories are not being told.

Where do you see the insurance industry in Uganda in the next few years?

Looking at Insurance Regulatory Authority (IRA) and Uganda Insurers Association (UIA), there is more self regulation and discipline from individual players. We are developing a concept of treating customers fairly which appears old in other markets and new in Uganda. There are more insurance companies and products in the pipeline. The government itself is slowly recognizing the importance of insurance as it started insuring its assets after looking at the growth of the industry.