The insurance sector registered a 10.61% growth in written premiums to a tune of shs1.2 trillion for the year ended 2021.
Speaking during the release of the insurance sector performance for the years, Ibrahim Kaddunabbi Lubega, the Insurance Regulatory Authority (IRA) Chief Executive Officer said overall, the industry registered a steady growth.
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"Non-life business generated shs706billion in gross written premiums up from Shs 664.98billion in 2020) representing a 6.25 % growth in premiums whereas on the other hand, life insurance business generated Shs 391.8billion in gross written premiums in 2021 up from Shs 324.35billion in 2020 which represented a 20.8% growth in premiums," Kaddunabbi said.
In terms of market concentration or composition, non-life accounted for 59.8% of the aggregate industry written premiums, 2.6% points lower than the market share index of 62.41percent in 2020.
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The report also indicates that the specialist health insurance company generated Shs 31.1billion in its first year of operation July 2021 to December 2021 whereas Health Membership Organisations generated shs48.3billion , a reduction of 36.1% from the shs75.6billion in 2020 and that it accounted for 4.2% of the market share.
"The significant decline was as a result of acquisition of one of IAA by Prudential Life Assurance, "the IRA Chief Executive Officer noted.
Brokers and bancassurance performance
The report indicates that bancassurance and brokers contributed greatly to the good performance for the insurance sector in 2021.
During the year 2021, the gross written premium income collected through the brokerage distribution channel was Shs 309.4 billion compared to Shs 277.12billion generated in 2020 and this represented an 11.60% growth but also accounting for 26.9% of the total insurance premium ," Kaddunabbi said.
The IRA chief applauded brokers for contributing greatly to the insurance sector arguing that they are critical players in the market as they play a critical role in providing expert, value-adding advice on risk management to their clients.
" An increase in their share in total premiums is a positive development."
The report also indicates that the gross written premium income collected through the bancassurance distribution channel was Shs 103.54billion compared to Shs 83.34billion generated in 2020 representing an 8.71% growth.
"This channel is gaining traction and increasing convenience as consumers access insurance through their respective banks with whom they have existing relationship. This is a very good gesture that banks are a one stop centre for the public to access several services."
The Insurance Regulatory Authority CEO explained that the continued growth in the insurance sector can be attributed to enhanced distribution with premiums collected through bancassurance, brokers and other means.
"The pandemic has cemented positive paradigm shifts for insurance. One such shift is a significant rise in risk awareness as a strong demand driver. To this, health insurance premiums grew by 7.8%. Many people who didn't have insurance covers suffered during the pandemic but those who already had covers were bailed out. Consequently many who didn't have covers initially have taken up insurance to be crucial,"Kaddunabbi said.
He noted that the acceleration in demand to transact online has seen many insurers increasingly offer digital engagement at all touch points as they compete with new, non-traditional players entering the consumer insurance market.
Outlook
According to officials from the Insurance Regulatory Authority, the outlook with the rising inflation is tilted heavily to the downside.
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"If the rise in inflation is sustained for a longer period, coupled with the contagion effect of Russia-Ukraine war, this could deter the economic recovery that was starting to be noticed. Public investments may be restricted, and private sector consumption limited to the minimum. This will inevitably impact the insurance sector. The continued slowdown in economic activity will exert pressure on earnings and the resultant decline in disposable income means minimal allocation to insurance," the IRA CEO said.
He was however quick to mention that all is not lost , adding that IRA is optimistic, things will improve.
"With the new budget being read and implemented thereafter, we expect some significant premiums from the public sector engineering/construction related investments. Also a number of projects that consume insurance which are donor-funded are picking up with the covid thereat waning away. Increased insurance premiums from the international travels and tourism activity now that the economies are fully opened up," he noted.
