IRA hopes that 2021 will be a better year compared with last year amidst the new wave of coronavirus pandemic
Kampala, Uganda | ISAAC KHISA | Enhanced distribution and sustainable growth in the uptake of medical and life insurance policies helped Uganda’s insurance industry to record a 9% growth in gross underwritten premiums to Shs1.03trillion in 2020 amidst the effects of coronavirus pandemic.
However, this growth, was slow compared with the 13.2% growth in gross underwritten premiums recorded in the previous year.
The revenue collected through bancassurance channels increased from Shs53.6bn in 2019 to Shs83.3billion in 2020 as uptake of medical insurance class of business mainly from corporate institutions increased by 22.9% to Shs243.79billion during the same period. Insurance uptake through digital channels such as Motor Third Party launched last year saw a surge in premiums to more than Shs11billion.
The industry’s non-life insurance recorded an increase in gross written premiums from Shs621bn in 2019 to Shs664.9bn in 2020, representing a 6.96% growth.
Life insurance premiums increased from Shs276bn to Shs324bn while Health Membership Organization recorded a drop in gross written premiums from Shs76.11bn to Shs75.5bn during the same period under review.
Notwithstanding the continued dominance of the non-life business, the life insurance business continued to grow relatively faster at 17.3% compared to 6.9% of non-life business, and HMOs declining by 0.7%. The insurance penetration remained at the same level of 2019 at 0.77% – one of the lowest in the East African region.
The gross claims paid on account of both life and Non-life (including HMOs) increased by 18.6% from Shs 374.9bn in 2019 to Shs444.6bn in 2020.
Profit for non-life insurance companies
Non-life insurance companies recorded an increase in profit from Shs19.17bn in 2019 to Shs23.77bn in 2020 as industry asset base increased from Shs 551.8bn to Shs 640.58bn representing a 16.1% growth. This signals the industry’s capability to absorb risks.
Uganda’s insurance industry has 21 non-life insurance companies, 9 line insurance companies and 5 health membership organisations.
Ibrahim Kaddunabbi Lubega, the chief executive officer at the Insurance Regulatory Authority of Uganda said the growth in the gross underwritten premium amidst COVID-19 pandemic signals an industry that is able to withstand economic shocks.
“As you are aware, economic activity stalled during the latter part of FY2020/21 due to a domestic lockdown that lasted more than four months, border closures for all but essential cargo, and the spillover effects of disruptions to global demand and supply chains. This resulted in a sharp contraction in public investment and deceleration in private consumption, which hit the industrial and service sectors hard, particularly the informal service sector,” he said, adding that the country’s economic growth, too, contracted.
Uganda’s economic growth is projected at 3.3% this financial year, rising from 3.0% last financial year, according to the Ministry of Finance, Planning and Economic Development.
Future outlook
Nevertheless, the regulator hopes that 2021 will be a better year compared with last year amidst the new wave of coronavirus pandemic based on the quarter one performance in which the industry recorded a8.25% growth in gross written premiums to Shs350.85bn.
Kaddunabbi said the insurance industry expect to record significant premiums from the public sector’s engineering and construction related investments, and that a number of donor funded projects will pick up during the year following the budget reading.
He said the industry is also optimistic that it will record premium growth in international travels and tourism activities, purchase of marine insurance locally and improved compliance to the statutory Motor Third Party Insurance.
“The investments in InsurTechs to deliver new Insurance Solutions in the new normal is expected to gain traction and appeal to the new clientele – the Youth,” he said, adding that prospective opportunities in the oil and gas developments too will contribute to the industry premium growth.
****
The post Insurance sector records slow growth in premiums appeared first on The Independent Uganda:.
from The Independent Uganda: https://ift.tt/3iMabIu
0 Comments