Uganda’s insurance sector continues to lag behind in the region, with less 1% reach of the entire population. The working assumption is that when banks start selling insurance policies, this could change because of their reach.
Stanbic Bank Uganda Ltd became the first banking institution in the country to receive a Bancassurance licence from the Insurance Regulatory Authority of Uganda (IRA) in October 2017. Stanbic was closely followed by Barclays Bank whose bancassurance license was confirmed in November 2017.
The issuance of the Bancassurance licences followed the passing into law of the Financial Institutions Amendment Act 2016 which included a provision for Bancassurance and the subsequent approval of the regulatory guidelines by the Bank of Uganda BOU.
The Financial Institutions Act 2016 specified that Insurance Regulatory Authority (IRA) would be responsible for receiving applications and licensing financial institutions to conduct Bancassurance business with authorization Bank of Uganda (BoU).
What is Bancassurance?
Bancassurance is a relationship between a bank and an insurance company aimed at offering insurance products or insurance benefits to the bank’s customers.
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In this partnership, bank staff and tellers become the insurance point of sale and point of contact for the customer. In doing so, they (bank staff) are advised and supported by an insurance company through wholesale product information, marketing campaigns and sales training.
This partnership arrangement can work for both banks and insurance companies. Banks can earn additional revenue by selling the insurance products, while insurance companies are able to expand their customer base without having to build brick and mortar structures.
According to Alhaj Kaddunabbi Ibrahim Lubega, the chief executive of Insurance Regulatory Authority of Uganda, the introduction of Bancassurance as a strategic distribution channel of insurance is one of the most significant recent developments in the Financial Services Sector in Uganda.
He says that it will increase access to insurance services amongst Ugandans in different parts of the country through the vast bank branch network.
“The high level of confidence and trust generally placed by the public in banks makes them particularly well positioned to attract consumers to purchase insurance products from their distribution outlets. It is through such partnerships that the insurance industry can grow and increase its penetration in Uganda,
