The sector performance report has indicated that insurance companies paid out shs444 billion in claims to various customers in the years 2020.
Claims are the monies paid out to a customer by an insurance company in case the insured risk occurs or comes to pay.
The report released by the Insurance Regulatory Authority(IRA) on Tuesday indicated that the claims paid out on account of both life and non-life increased by 18.62% from shs374.9 billion in 2019 to shs444.69 billion last year.
“The narrative on performance above remains incomplete if the insuring public is not brought into the equation. Much effort remained focused on streamlining claims processes whilst paying attention to possible fraud. In this regard, it is impressive to note that gross claims paid on account of both life and non-life increased by 18.62percent,”said Alhaj Kaddunabbi Ibrahim Lubega, the IRA Chief Executive Officer.
A premium is the an amount paid periodically by the customer (insured) to the insurance company(insurer) for covering his risk.
According to the performance report, the insurance sector collected shs989.35 billion in premiums which was an increase from the Shs818 billion collected the previous year.
Non-life, also as general insurance companies paid out the most claims at shs664.975 billion representing 62.41% of the aggregate industry collected claims.
On the other hand life insurance companies collected shs324.35 billion in premiums.
The sector performance report also indicates that health membership organisations collected shs 75.56billion in premiums.
The report also indicates that in terms of agriculture insurance, a total of 54,287 farmers were in 2020 covered and generated shs11.426billion in premiums.
This was however a reduction from the shs12.77billion collected from 81,794 farmers in 2019.
“The reduction in the numbers is mainly due to the slowed activity as a result of Covid 19. Despite the reduction in business volume, total claims paid increased from shs 1.846billion in 2019 to shs 4.116billion in 2020,”Kaddunabbi said.
According to the Insurance Regulatory Authority CEO, despite the onset of the Coronavirus pandemic and its effects like a sharp contraction in public investment and deceleration in private consumption, there were some positives.
“Despite these adverse macroeconomic fundamentals, the insurance sector posted a positive growth of 9.34% over the reporting year despite being lower than the previous 13.22% in 2019,”Alhaji Ibrahim Lubega Kaddunabbi said.
He attributed the positive growth to enhanced distribution which saw Bancassurance channels lead to collection of shs83.3 billion in premiums in 2020, representing a 55.4% growth compared to the 2019 performance.
“There was also sustained growth in uptake of medical insurance class of business mainly by corporate Institutions, growing from shs 219billion in 2019 to shs 243.79 billion in 2020,”the IRA CEO added.
He noted that there was also increased uptake of individual life insurance which he attributed to increased awareness and the growing middle class.
According to Kaddunabbi, the resurgence of the Coronavirus pandemic and its second wave are expected to have a big effect on the insurance industry.
“If the virus spreads more widely in Uganda and the impact lasts longer globally, as it is feared, this could deter the economic recovery that was starting to be noticed. Public investments may be reallocated to the Health sector as a way to contain the pandemic. This will inevitably impact the insurance sector,” he said.
He added that if the second wave is managed well, they are optimistic that with the new budget read and implemented, some significant premiums from the public sector engineering and construction related investments will be got.
Insurance Regulatory Authority also expects a number of projects that consume insurance and are donor funded to pick up during the year .