3 June 2016

Uganda: Ira's Kaddunabbi Marks Five Years, Sees Insurance Growth

Five years after he took over as chief executive officer of the Insurance Regulatory Authority, Ibrahim Kaddunabbi Lubega, says he is content with growth in the sector.

Recently, as he looked towards the end of his term as CEO, Lubega pulled out impressive statistics to show that the insurance industry is much more stable.

"The sector has seen growth from Shs 297bn in underwritten premiums in 2011 to Shs 611bn by December 2015," he said, last Thursday. "We have seen stronger players enter the sector and we are confident that they will be able to grow further."

Over an hour, Lubega detailed how the sector had evolved ever since he took office. He cited increased public awareness of the benefits of insurance, IRA's increased emphasis that companies pay claims on time, as well as the separation of life and non-life business in companies.

"In particular, this has led to better capitalized companies and brought in even more players into the industry," Lubega said.

Asked to name two issues that he is most proud of over the five years, he was hesitant.

"However, let me say that the establishment of Uganda Re has been able to keep more money in the industry as reinsurance now happens in Uganda. Also, I think the training levy has led to an increase in competent manpower in the industry."

Lubega added that they were working on several pieces of legislation that he feels will translate into a more dynamic sector over time. These include regulations on bancassurance (banks offering insurance), health insurance bill, amendments in the motor third party bill as well as harmonization of regulations with the other sectors in East Africa.

He is also pleased about the innovations in the sector, such as the increasing reliance on electronic platforms and new policies such as agricultural insurance that he believes will make a difference over time.


Before Lubega's appointment, the sector had been run by the much-derided Uganda Insurance Commission. According to Statewide Insurance Company's managing director, Joseph Kiwanuka, the commission lacked the motivation to keep the sector in check.

"First of all, they were housed in the same building as the National Insurance Corporation, which they were supposed to be superintending over ... so, it was difficult to put conditions on your landlord."

Since the Insurance Act 2011 was amended, the IRA has held the sector in check.

"He has imposed strict governance on the sector, making it impossible for players to flout rules," Kiwanuka adds. "Some who failed to meet the basic requirements have faced it rough."

Latimer Mukasa, a former chairman of the Uganda Insurance Brokers Association, agrees with Kiwanuka.

"[Lubega] has been able to restore order to the sector, and that is perhaps why you are seeing growth in the industry ... understandably there are those who see him as too strict, but he has also been fair."

Mukasa is particularly pleased with the IRA's emphasis on high operating standards for operators.

"In the past, anyone who failed elsewhere could try their luck in insurance; now the IRA is calling for minimum academic standards for brokers and insurance agents, which has caused concern from time to time," Mukasa adds.

Azim Tharani, the managing director at Goldstar Insurance company, said the fees need to be revised.

"Many of the insurance companies are in business to make money ... but the IRA is in the business of imposing heavy levies, and I say this in the hope that we shall not be targeted," he said.

Tharani is concerned about the many levies charged by the IRA. One of these is the training levy, which amounts to four per cent of all underwritten premiums by each insurance firm. The revenue from this levy is sent to the Insurance Institute of Uganda, which is in charge of training.

Elvis Khisa, who is the chief executive officer at the IIU, is pleased with the development since more people are benefitting from insurance training. The IUIU has seen more than 250 insurance agents trained in the last year alone. Lubega admits that there is plenty of unfinished business and challenges to be tackled.

"The low uptake of insurance by the public, unethical conduct by some of the players who undercut each other in business as well as late remittance of claims must continue to be fought," he said.


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