Insurance contributes a lot to the economic growth of society by provides stability to the functioning of process. This is because the insurance industries develop financial institutions and reduce uncertainties by improving financial resources.
Considerable attention has been devoted to evaluating the relationship between economic growth and financial market deepening. Most of what we have learned relates to banking systems and securities markets - with insurance receiving only a passing mention.
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Yet, while insurance, banking, and securities markets are closely related, insurance fulfils somewhat different economic functions than do other financial services, and in turn requires particular conditions to flourish.
In an interview with Daily Monitor recently, the Finance minister Matia Kasaija said the contribution of insurance sector in Uganda's economy is still very minimal because there are very few insurance businesses in the country. Additionally, insurance services are not yet spread in all parts of the country.
"The insurance business in this country is still very small because many organisations/companies and people do not take insurance services," he said.
Mr Kasaija added: "Few things are being insured because we insure very limited things thus limiting the contribution of the insurance sector in the economy."
However, Mr Kasaija said the government is promoting the insurance sector in Uganda by providing Agriculture Insurance Scheme in partnership with the commercial banks which is currently doing well because of the subsidies being given out.
In FY 2016/17, Government operationalised the Uganda Agriculture Insurance Scheme. Statistics in the finance ministry show that a number of farmers have benefited and received insurance cover for both crops and animals, and these include; farmers under Nucafe, Centenary Bank, Cairo Bank, Advance Microfinance, Community Funds, Ifish fish farm, Dejolisa Farm, Biyinzika Farm Ltd, Sr Afro Cheeks, Eclof, Muiis Project, Kaweri, SolaceFarm, Feed the Future and FIT Uganda, Individual farmers, among others. The subsidy utilisation projections, for the current season, are as per table 4.4 below.
In FY 2017/18, the Finance ministry said Government will continue implementing the Uganda Agriculture Insurance Scheme as a pilot, to further subsidise agriculture insurance premiums for both small and large scale farmers to guarantee the returns expected from crop and livestock farming. The scheme will cover all regions of the country focusing on strategic crops and animals.
As per the Uganda Insurers Association, the prospects and businesses to be underwritten in the next six months are estimated at Shs8.2b in total premiums before applying the Government subsidy.