Uganda Insurance Industry Dominated by Non-Life Insurance Segment, According to Timetric29 Apr 2013 • by Natalie Aster
The Ugandan insurance industry recorded a positive growth rate during the review period and was supported by relatively stable macro-economic conditions, a favorable investment climate and economic growth. The total number of policies issued in Uganda grew from 242,360 in 2010 to 339,560 in 2011, at a CAGR of 40.1%. The industry is dominated by the non-life insurance segment, which accounted for 65.1% of the total gross written premiums in 2012, followed by the personal accident and health segment with a market share of 22.6%. The life insurance segment accounted for 12.3%. For low income earners, Uganda has promoted micro insurance products. However, there are many challenges in operating this kind of product such as a lack of public awareness and inefficient distribution channels.
In 2011, the Insurance Act was modified and a number of amendments were brought into force regarding deposits, health insurance premiums, membership of the Insurance Institute of Uganda (IIU) and the Policyholder Compensation Fund. These new guidelines focus more on insured interests and its hopped they will instill a level of professionalism and discipline into the industry.
According to the report “The Insurance Industry in Uganda, Key Trends and Opportunities to 2017” by Timetric, the headline inflation rate in Uganda grew from 4% in 2010 to 18.7% in 2011. The increase was due to the volatility in exchange rates and an unexpected increase in international oil prices. Fluctuating inflation rates create uncertainty in terms of monetary value. Short-term insurance products are however, relatively safe from uncertainty, but long-term insurance products are susceptible to inflationary trends.
The Insurance Industry in Uganda, Key Trends and Opportunities to 2017
Published: March, 2013
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The Ugandan life insurance segment is highly concentrated with the five-leading insurers representing a market share of more than 90% in 2011 in gross written premium terms. There were eight operational companies in the segment in 2011 and Liberty Life Assurance remained the market leader with a share of 40%. It was followed by Insurance Company of East Africa Limited (ICEA) with a market share of 25.7%, UAP Insurance with a market share of 16.1% and Jubilee Insurance with a market share of 6.3%. Collectively, the four-leading insurers accounted for a gross written premium share of 87.7%.
Ugandan banks are actively establishing new loan schemes and are offering attractive interest margins. Consequently, Uganda has recorded asset-financing growth, especially in terms of housing and automobile loans. Moreover, banks have reduced down payments to attract new customers. Many finance vehicles without a down payment, for example Development Finance Company of Uganda Bank offers 100% financing for new trucks and buses. Due to the increasing prevalence of asset-financing, automobile and property insurance are expected to record an upsurge in demand over the forecast period.
More information can be found in the report “The Insurance Industry in Uganda, Key Trends and Opportunities to 2017” by Timetric.
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