Uganda Insurance Regulatory Authority-IRA, has today 10 October, 2024 released the insurance sector performance report for the half year of 2024.
Figures show that Life insurance continues to grow much faster compared to Non life insurance.
Key Performance highlights
Non-life business generated UShs 542.3billion in GWP (up from UShs 510.1billion in a comparable period, 2023) representing a 6.30% growth in premiums .
Life insurance business on the other hand generated UShs 357.8billion in GWP (up from UShs 291billion in 2023) representing a 22.97%growth in premiums.
Health Membership Organizations (the Mono-line, facility based Medical Insurance providers) generated UShs 33.1billion up from UShs 27.3billion in 2023 representing a 21.24% growth over the period.
Microinsurance remains vital in offering financial protection to vulnerable populations by safeguarding them against unforeseen events, fostering their resilience, and empowering individuals and communities to recover from economic setbacks. In a testament to its growing importance, microinsurance companies experienced remarkable growth of 32.52%, generating UShs 0.613billion in half year of 2024, up from UShs 0.463billion in a similar period in 2023. This growth underscores the critical role microinsurance plays in enhancing the financial security of those who need it most.
Overall, the insurance industry saw robust growth, with total premiums raising from UShs 828.9 billion in the first half of 2023 to UShs 933.8 billion over a comparable period of 2024, registering an impressive 12.65percent growth. This surge reflects heightened business activities, underscoring the sector’s resilience and its pivotal role in the country’s economic landscape.
In terms of market share.
Non-life accounted for 58.07percent of the aggregate industry written premiums, 3.47percentage points lower than the market share index of 61.54percent in a comparable period in 2023.
Life business on the other hand accounted for 38.32% of the aggregate industry written premiums, 3.22% points higher than the market share index of 35.10% in 2023. The increasing share in Life is a key highlight because Life insurance premiums are essential for building a reserve that can support long-term investments.
Health Membership Organizations accounted for 3.54% of the Market Share, up from 3.30% in the first half of 2023.
In terms of relative growth, Life Insurance business continued to grow much faster than non-life at 22.97% compared to 6.30% of non-life business and 21.04% of HMOs.
The relatively faster rate of growth in life indicates a positive trend towards individuals prioritizing long-term financial security and protection. This shift suggests that people are increasingly recognizing the importance of safeguarding their futures and that of their loved ones, reflecting a growing awareness and readiness to invest in comprehensive financial planning and security measures.
Claims Payouts.
Efficient insurance claims payment is crucial to ensure policyholders receive timely financial support when they need it most, fostering trust, satisfaction, and a reliable safety net against unexpected events.
“As a Regulator, we have instituted measures for zero-tolerance for non-payment of legitimate claims. In this regard, Gross Claims paid on account of both life and non-life (including HMOs) were UShs 423.8billion in the half year period ending June, 2024 which is 45.39% of the total Gross Written Premiums. We shall continue to guide the industry in exploring mechanisms to improve the turn-around times for payment of legitimate claims so as to enhance value to the insuring public” said Al Haji Kaddunabi Lubega, the CEO, insuranceregulatory authority while speaking to media today.
Brokers performance
During the half year ending June 2024, the gross written premium collected through the brokerage distribution channel was UShs 298.3billion compared to UShs 257.8billion generated in a similar period in 2023 (representing a 15.63% growth).
In relative terms, Brokers business accounted for 31.9% of the total insurance premium (an increase by 0.79% from 31.11% share in comparable period in 2023).
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. An increase in their share in total premiums is a positive development.
Bancassurance Performance
Bancassurance continues to be a powerful distribution channel, as highlighted by the impressive growth in gross written premiums generated through banks. During the first half of 2024, premiums collected through Bancassurance reached UShs 107.5billion (representing 11.5% of the total premiums underwritten), a significant increase from UShs 83.6billion in the same period in 2023, reflecting a robust growth of 28.59%. This remarkable performance underscores the tremendous potential of mutual partnerships in expanding access to insurance and enhancing financial security for customers.
Sector Remains on a positive growth trajectory
According to Kaddunabi, the positive growth continued to emerge from;
Enhanced Distribution: Premiums collected through Bancassurance channels have shown significant growth and so is brokerage contributions, i.e. 11.51% and 31.9%, highlighting the effectiveness of these partnerships in reaching a broader customer base.
Acceleration in online transactions: As the consumer insurance market becomes more competitive with the entry of non-traditional players, insurers are increasingly enhancing their digital engagement across all touchpoints to meet the rising demand for online transactions.
Increased Customer Confidence: The insurance sector is experiencing improved customer confidence, driven by better claims payments, greater consumer empowerment, and a strengthened complaints redress mechanism implemented by the Authority.
Growth of the Middle Class: The expansion of the middle class is significantly impacting the Individual Life business line, as more consumers seek financial products that provide security and long-term benefits.
Outlook half year of 2024
The annual inflation rate eased for the second month to 3.0% in September 2024, the softest in eight months, down from 3.5% in the prior month and 4.0% in earlier months of the year. Such a stable macroeconomic environment is conducive to the growth of the insurance sector, as it fosters a favorable investment climate and positively influences consumers’ purchasing power.
“Looking ahead, we anticipate positive developments driven by expected public sector investments in engineering and construction in the second half of 2024 and into 2025. Additionally, innovations such as improved Marine Insurance compliance and increased public trust in the sector are likely to contribute to further growth. As a result, we project that the insurance sector will continue to expand, with growth rates remaining above 10%” Kaddunabi said.
