Kampala — The headwinds in the economy could have affected the insurance sector in 2016 with much slower growth expected. The Ugandan economic slowdown has affected businesses and reduced the disposable income, which has meant adjustments in expenditure on things like Insurance.
Mr Al Hajji Kadunabi Lubega, the chief executive officer of the Insurance Regulatory Authority (IRA), predicts modest growth for the sector at the end of 2016.
"From what we registered in the first two quarters of the year, the growth won't be as good as it was in 2015. We expect moderate growth of about 10 per cent compared to the over 20 per cent registered in 2015," he said on the sidelines of the IRA CEO's breakfast at the Kampala Serena Hotel on Thursday.
He attributed the reasonably projected slowed growth to the economy that has been rather sluggish for the best part of 2016. There was reduced Foreign Direct Investment, which translates into less business for the insurance companies to underwrite.
"If there is no money within the private sector, then insurance uptake also reduces. If the economy slowed and with the prevailing high-interest environment, the insurance sector cannot be insulated from such developments," he added.
Uganda's economy, according to the IMF PSI review concluded in October 2016, reveals that the "economy performed well in a complex environment," but the 2016 election, slowed global growth and regional developments led growth to decline by 4.8 per cent.
In the first half of 2016, the insurance sector had written premiums of Shs310b, slightly lower than what had been written over the same period in 2015. The third largest players in the non-life segment of the market AIG last month announced plans to exit the Ugandan market.
AIG has not provided a reason for their decision to exit the Ugandan market. They have, however, revealed a global decision to pull-out of smaller markets like Uganda.
However, IRA discounts the economy for being the reason of AIG's exit.