This year holds a promise of growth with more Ugandans taking on insurance,    

The sector, even as penetration remains under 1 percent, has been expanding in terms of premiums, supported by especially growth in health or medical and micro insurance premiums, which have since the advent of Covid-19, registered significant uptake as Ugandans seek to insulate themselves against out-of-pocket expenses in cases of medical emergencies or other risks.

In 2022, the Insurance Regulatory Authority Uganda indicated that health insurance was the fastest growing segment of the insurance sector as more corporate organisations and individuals continued to use it as a strong bargaining tool.

But beyond this, more Ugandans have found it necessary to protect themselves against other risks, thus contributing to the growth in both premiums and uptake.

Data from IRA indicates that gross written premiums continue to grow in double digits, rising to an industry average of UGX 1.7 trillion due to enhanced consumer confidence.  

Thus, the sector, will this year continue to work well for business building and community development, and will continue to play a key in building sustainable businesses.   

Contrary to what many believe, Ernest Barusya, the CEO of Kenbright Actuarial Advisory, says insurance is a business enabler and not a cost.

“Every businessperson ought to do proper risk mapping and monitoring. Whereas predictable risks often do not require insurance, unpredictable risks must always be insured, this is because they can deter both short- and long-term sustainability and life of a business,” he says, noting that insurance should not necessarily be expensive, but just a measure of premium against the level of risk.

However, several market leaders have not invested in internal mechanisms to monitor and mitigate risks, thus, increasing their cost of insurance premiums.

This, Barusya says makes operating in a risky environment expensive in terms of premiums, which impacts the business or individual bottom lines.

“We have a conducive environment for innovation and compliance to enable insurance companies provide tailored risk management solutions and risk capacity,” but notes that there is need to de-risk by conducting continuous risk assessments, which could be used by actuaries to quantify risk, premiums and pay-outs in the event of a loss.

Actuaries have the expertise to quantify risks and benefits at the term end or in the event of loss.

“Actuarial capacity continues to grow, The Insurance Training College has done a great job in professionalising the industry to provide tailored insurance and risk management solutions, which ensure sanity and stability in the market,” Barusya says.

On the other hand, he says, insurers must be intentional on innovation, to ensure that consumers are provided with alternatives and products that have the right value returns.

Uganda has also experienced growth of new insurance risks such as oil & gas, political violence, clinical trials and cyber insurance, among others that have been characterised as specialist in nature.

Thus, this makes the component of reinsurance in such a setup critical to boost insurers’ capacity in handling risks.

However, the growth, Barusya says has come with increased capacity with initiatives such as Uganda Reinsurance Company, coupled with other regional and global players coming in to build a strong reinsurance market.

Uganda Insurers Association has also been pivotal in setting up industrial consortiums like Oil & Gas, Agriculture & Marine that ensure risk pooling among insurers to maximise collective risk and capital capacity.

Thus, this year, the market is expected to grow more insurance pools that seek to take care of risks that are classified as special, (uninsurable) such as boda boda risks.

Supporting business growth through risk management

Other than trying to take care of risks that are directly related to the businesses, Barusya says business leaders need to pay attention to risks that poses existential challenges to other sectors of business.

For instance, he says, threats against mass consumers that might dent trade in goods or services such as data, airtime or mobile money, should always be examined to prevent a whip out of business sectors that might have a long-term impact on the many people.

“If it’s also true that a large portion of Ugandans are a bill away from chronic poverty, then, as a business leader you ought to be interested in subsidizing medical insurance solutions for such a population,” he says.

Thus, business leaders must continuously understand their business chains and partner with insurers to find ways of reducing or subsidizing the cost of insurance for mass market segments to protect them from risks.

“This can be done through investing in synergies and initiatives that support the population to embrace insurance as a way of life, as well as subsidising the cost of insurance to enable affordability,” he says, adding that ti could also be through train the population about insurance and its role in business.

Uganda’s insurance sector presents an opportunity for business leaders to drive sustainability while uplifting the communities they operate.

By embracing insurance as a strategic business enabler rather than a cost, leaders can mitigate risks, foster innovation, and enhance resilience across sectors.

As more Ugandans adopt insurance, businesses that proactively integrate risk management into their operations will not only safeguard their growth but also contribute to the stability and prosperity of the economy.