Big Interview: Government’s failure to insure its assets is affecting the growth of Insurance industry

Players in the Insurance industry have expressed optimism about the future of the sector but they believe that a lot needs to be done especially during this period when the country is struggling economically.

Speaking to The Nile Post in an interview, the chief executive officer at Uganda Insurers Association (UIA) Jonan Kisakye asked the government to insure all of its assets saying this will boost the growth of the industry.

Excerpts below:

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In brief, who is Jonan Kisakye and why do people describe you as the big force in the insurance industry today?

I don’t think that I am a big force. I am just an insurance professional with over 15 years’ experience in insurance. I have worked in both short and long-term insurance markets. I have been involved in insurance training and I have worked with training institutions. I was born here at Mengo hospital slightly 43 years ago but I come from Masaka. That is where I grew up. I studied primary school in Masaka.I came to Kampala for my secondary. I did my O and A level at King’s College Buddo. Then I joined Makerere University. I have a Bachelor of Arts degree in Social Sciences. I also had an opportunity to undertake a Masters of business administration at Makerere university but also, I had an opportunity to take a number of insurance related courses. I joined the industry in 2005.

The Uganda Insurers Association has been very vocal about marine cargo insurance. What is it and why is it a hot topic now?

Marine Insurance has been here for long, it is actually one of the oldest classes of insurance in terms of the policies that we offer as players. I think what you are referring to is the media campaigns that we have been running. You need to understand that there was research that was conducted. That research highlighted the fact that the countries in the region; Uganda, Tanzania, Kenya were losing a lot of money in terms of premiums or marine cover that were bought outside the region. That is why there is now a drive to localize it to ensure that we retain these premiums. But also, as an industry we noticed that a lot of losses were not being met by the foreign players.

How much were we losing in premiums to the foreign companies?

We lose like Shs 3.8 billion plus in premiums that cost about Shs 30 billion per year yet we can make more than Shs 50 billion every single year. These are funds that are coming in to build the local market. Remember the insurance employs the local Ugandans. Once our premiums increase our probability increases, our corporation tax increases, so it is a multiplier effect within the economy.

What is the scope of cover for Marine Cargo Insurance? How does it benefit an importer?

Marine Insurance first of all is simply a policy that will cover an importer from the country of origin to the country of destination. The policy ensures that your goods are in the same condition from the country of origin to the country of destination. You will notice that now that with online trading, many importers will order for merchandise without necessarily being there, so, within that journey there are quite a number of risks. There can be accidents, there can be fires, there can be theft. Marine insurance does not only cover goods at sea, we cover goods on land, sea or by air against the perils I have mentioned.

As an importer, what documentation do I need to get that policy?

It is important as you prepare to import goods, you also make arrangements for insurance, it is important that (this moves hand in hand). Don’t wait for the goods to get here for you to get insurance. So, it is important that as you process the importation of your goods, you also make arrangements for your insurance. First of all, an importer must have a TIN number, it is a basic thing. There is what we call a commercial request, for any merchandise that you import prior to the importation you receive an invoice which is used to effect payment. That invoice declares or shows the kind of the good that you are importing and that is an important component in insurance because value is what we insure. We don’t insure the actual goods but their value. These are very critical items.

Aside from Marine Cargo Insurance and speaking insurance in general, how has the current economic situation impacted on the sector?

Definitely as a sector we have been impacted in terms of payments of premiums because with the current economic situation especially the rising inflation., the cost of living is going up, it means the disposable income (from our customers) has also reduced but also, the insurance sector has registered growth over the last six months. If you look at the last two quarters, we are averaging the growth of more than 25% which is good growth for an industry. Much as we see a bit of a challenge in terms of incomes as a result of inflation, we also continue to see the industry growing.

Insurance is often looked at with a grain of salt, how do you think this can change so that the general public can view it more as a necessity than a luxury?

What I want to tell you is that the appreciation and understanding of insurance has increased. I think the biggest change as to why you are raising this kind of question is because of historical reasons but previously insurance was seen as an industry that was simply collecting money without necessarily (meeting its promises). But time has changed, we now have a law that manages the industry. The industry is more streamlined and structured. Because of being more streamlined and structured, there are a lot of compliance issues within the insurance industry.

What is your general outlook of Uganda’s insurance sector? Is it in a good place and headed in the right direction?

I think the insurance industry is growing tremendously. We are seeing new products coming on board. The industry is taking on automation. We now see the products being assessed through website, mobile applications which was not the case previously. We are seeing insurance now moving into critical sectors, for example agriculture. We see companies now providing a single product. We have now gone into the space of gas and oil insurance. We see a lot of improvement like digitization.

Lastly, what kind of help do you need from the government to boost the industry?

Government must insure its assets. Right now, the government does not insure its assets. Until the government can insure its assets and lead by example, that is when the industry will grow.  We are calling upon the government to be able to insure its assets. You have seen fire at the main building of Makerere University, that building was never insured. You have seen fire gutting a number of strategic government assets and these have been lost and yet these are services that we provide. Premiums are lost. Government is the biggest business partner you can ever work with and the government has a lot of assets. These assets need to be insured.