Uganda’s Insurance Regulatory Authority (IRA) has released the official 2022 report detailing the performance of the insurance industry, showing that the sector remained on a growth trajectory in the year 2022, with Gross Written Premium (GWP) growing from UGX 1.183 trillion in 2021 to UGX 1.425 trillion in 2022⏤ a 20.4% growth.
In 2021 the industry grew by 10.61% and 9.34% in 2020.
According to IRA’s Chief Executive Officer, Alhaj Kaddunabbi Ibrahim Lubega, “The impressive growth is evidence of recovery of business activity from the effects of Covid -19 pandemic.”
“Of the UGX 1.425 trillion, the non-life business generated UGX 818.7 billion in GWP, up from UGX 706.7 billion in 2021, representing a 15.8% growth in premiums and accounting for 57.7% of the market share (59.8% in 2021),” Kaddunabi said.
“The growth rate in premiums of 15.8% registered in 2022 is significantly higher than the 6.25% which was registered in 2021,” he added.
“Life insurance business, on the other hand, generated UGX 485.8 billion in GWP in 2022 (up from UGX 397 billion in 2021) representing a 22.3% growth in premiums and accounting for 34.1% of the market share (32.3% in 2021,” Kaddunabi further said, adding that: “Similarly, the growth rate in life premiums of 22.3% registered in 2022 is significantly higher than the 11.7% which was registered in 2021.”
Health Membership Organizations (the Mono-line, facility-based Medical Insurance providers) generated UGX 38.3 billion, down from UGX48.3 billion in 2021, a 20.7% decline.
The significant decline, the regulator said, was due to the exit of one HMO i.e. International Medical Link (IML) and the loss of some clients to health insurers due to an increase in premium at renewal arising from the previous poor loss experience.
The specialist health insurance company category generated UGX 81.4 billion in 2022, up from the UGX 31.08 billion written in the first half of its first year of operation in 2021, representing a 162% growth. This accounted for 5.7% of the market share.
Micro-insurance companies generated UGX 0.611 billion marginally reducing from UGX 0.657 billion in 2021- a decline of 7% and accounting for 2.7% of the market share, compared to 4.2% in 2021.
“The reduction in growth may be attributed to competitive pressures on incomes especially at the lower income pyramid brought about by increasing costs of living. We shall continue to examine this area with a view of identifying key interventions owing to the critical importance of this segment,” Kaddunabi said.
He also revealed that as a result of the significant growth in 2022, a total of 2,475,657 Ugandans were insured and considering UBOS’ estimated population of 45.5 million, this translated into an insurance uptake of 5.4% of the total population. Insurance penetration also slightly improved from 0.796% in 2021 to 0.876% in 2022.
Insurance density, which is a measure of the extent of insurance deepening, increased by 11.6% from UGX 28,059 to UGX 31,315.
Kaddunabi also reported that in the year 2022, a total of 316,496 farmers were covered, generating UGX 11.4 billion in GWPs to the industry for the insured sum of UGX 372.2 billion. This brings the cumulative number of farmers to 665,240, and the cumulative insured sum of UGX 2.3 trillion. A total of UGX 8.75 billion was paid in claims on account of agricultural losses suffered. Cumulatively, a total of UGX 32.6 billion has been paid to date in claims over the scheme period.
The regulator noted that overall, “sector players have continued to demonstrate great improvements in the quality of service related to payment of legitimate claims. Gross Claims paid on account of both life and Non-life (including HMOs) increased by 8.2% from UGX 564.8 billion in 2021 to UGX 618.7 billion. This compares with UGX 444.7 billion paid in 2020).
Intermediaries Performance
During the year 2022, the gross written premium income collected through the brokerage distribution channel was UGX 480 billion compared to UGX 412.6 billion in 2021, a 16.0% increase.
In relative terms, the brokerage business accounted for 29% of the total insurance premiums⏤ a 2.1% increase, up from 26.9% in 2021.
“An increase in the brokers’ share in total premiums is a positive development given their value propositions in the insurance ecosystem, especially for the insurance consumers,” Kaddunabi said.
The gross written premiums collected through banks (bancassurance), reached UGX 142.7 billion in 2022, up from UGX 103.5 billion collected in 2021, representing a 37.8% growth and accounting for 10% of the total premiums (8.8% in 2021).
Kaddunabi said this was a “good development as banks are expected to leverage on their existing infrastructure to galvanise the goodwill of its clients to attract more people into the insured bracket.”
Stronger insurance industry
Overall, Kaddunabi said, the industry remained strong, registering an 11% growth in the sector’s net assets, from UGX 834.3 billion in 2021 to UGX 924.2 billion in 2022.
“Net Assets are a measure of financial strength and capability of the sector to absorb risks,” said.
He also said that in the year, the sector had registered a number of achievements, including the operationalization of the Insurance Appeals Tribunal and a partnership with the Innovation Village to promote activity in the Insurance Regulatory Sandbox. IRA had also in 2022, completed the development and eventual launch of the online complaints management system as well as the acquisition of a regulatory reporting software which will aid in the reporting, licensing, risk-based supervision, amongst others.
He also said IRA had completed the development of the Mortality Table for Uganda that would assist especially life insurance companies in accurately determining risk and premiums.
Looking forward, Kaddunabi said the industry was projected to grow further as indicated by performance in the first quarter of 2023.
“The first quarter for 2023 already paints a picture of a better performance this year, as UGX 473.8 billion was already registered in Q1, 2023 compared to UGX 412.5 billion in Q1, 2022, a growth of 14.9% growth,” Kaddunabi said.
He further said that it was expected that 2023 growth would be driven by growth in life insurance⏤ both group and individual, enhanced risk awareness, increased public sector engineering/construction-related investments in the first half of 2023/24, better marine insurance compliance as well as increased uptake of medical insurance. 2023 growth would also be powered by emerging sector opportunities, especially in oil and gas, growth in premiums from agriculture as agriculture insurance gets incorporated in the Parish Development Model as well as enhanced insurance awareness and public trust “resulting from strengthened complaints redress mechanisms (including now, the operationalisation of the Insurance Appeals Tribunal.”
“In the short-to-medium term, more attention will be paid to claims and claims processes to ensure that all payable claims are paid and on time. We shall also engage micro-insurers and HMOs to understand their predicament and determine how to intervene in view of their critical importance,” Kaddunabi said.