The insurance industry in Uganda continued to see increased business in 2Q2020, according to data released by the Insurance Regulatory Authority (IRA).
Insurance companies in the second quarter of 2020 generated a total of UGX534bn ($145m) in gross written premiums, a 7% increase from UGX495bn during the corresponding period in 2019, reported Daily Monitor citing the IRA data.
IRA data indicate that there was an increase in premiums across all segments in 2Q2020. For instance, non-life insurance business registered a 3.4% increase in GWP from UGX347bn in 2Q2020.
Life insurance, which has been growing exponentially, registered a 20% increase in premiums to UGX150bn in the second quarter of 2020. Health membership organisations recorded premiums of UGX37bn in 2Q2020 compared to UGX36bn in the same period in 2019.
Microinsurance, however, recorded the highest growth in GWP, that reached UGX207m in 2Q2020 from only UGX29m in 2019.
Trend
Mr Ibrahim Kaddunabbi Lubega, the IRA CEO, had said previously that while the first quarter of 2020 registered 11% growth, the effects of COVID-19 were expected to be felt in the second quarter.
According to Mr Sande Protazio, the IRA director of market research and development, while there was an absolute growth in premiums in real terms in 2Q2020, the trend analysis reflects slower GWP growth.
Smallest increase in GWP
“This must be the smallest increase we ever had. When you look at the trend analysis, you will notice it is a 5 percentage point decline in comparison to the 2019 growth from 2018’s,” he said. But he noted that growth in the microinsurance sector was helped by adoption of technology by microinsurers.
Uganda’s insurance sector has 21 general, nine life and two micro insurers, among others.
COVID-19
Still, the insurance sector is ranked eighth among economic sectors in Uganda that are most likely to recover faster than others after the COVID-19 pandemic.
A report by Financial Sector Deepening Uganda (FSDU), to determine the impact of COVID-19 on multiple sectors including tourism and transport, ranks the insurance sector as highly likely to recover after the pandemic.
Mr Ramadhan Ggoobi, an economics lecturer at Makerere University Business School, explained that the unpredictability of the pandemic has increased the public’s intolerance to risk.
“People will have a lower appetite for risks than they had before. The economic downturn is likely to increase the demand for insurance solutions, especially those with price propositions that are simple, transparent and cost-efficient,” he said.
He was speaking to insurers at an online meeting organised by IRA to discuss the topic, “Insurance at the Dawn of COVID-19: Analysis of current challenges, responses and opportunities for insurers in the ‘new normal’.”
Mr Ggoobi also said that the insurance sector, which is reliant on other sectors, is expected to suffer a severe hit from the effects of COVID-19 on the economy.
“While premiums are expected to drop in 2020, claims are expected to increase on account of increased liability insurance claims, for example, hotels or airlines sued for negligence if one contracts COVID-19 at their premises,” he said. Workers compensation is also expected to increase in cases involving workers contracting COVID-19.
“Event cancellation: the outlook shows events will struggle to get insurance coverage in the future,” Mr Ggoobi said.
Source MEIR
