Insurance companies raise Shs1.08 trillion in gross premiums in nine months

Uganda’s insurance industry has raised shs1.08 trillion in gross written premiums in the first nine months of the year.

This was revealed by Al Haj Ibrahim Kaddunabbi Lubega, the Chief Executive Officer of Insurance Regulatory Authority (IRA while releasing the performance highlights for the third quarter of the year as at September, 31.

“The industry remained on a positive growth trajectory in the third quarter of 2022, with the total gross written premium growing from Shs 912billion in quarter three of 2021 to Shs 1.08 trillion in quarter three of 2022, posting 18.57 percent growth over the same reporting period,”Kaddunabbi said.

The amount of shs1.08 trillion is actually higher  than the shs1.06trillion that was registered the entire year in 2020 in terms of gross written premiums and the latest figure shows growth of the insurance sector in the country.

“This growth is a statement of resilience in a contracting economy as a result of challenging macroeconomic fundamentals, characterised by double digit inflation.”

The report shows that non-life business generated shs632.3 billion of the total gross written premium in the third quarter of 2022, growing from shs 528.8billion in the same period last year, representing a 19.58% growth.

Non-life entails cars and buildings among other non-life assets insured.

On the other hand, life insurance business generated Shs 351.3billion growing from shs 291.6billion in the same period last year , representing a 20.46% growth.

“Health Membership Organisations generated shs 33.04billion, down from shs 35.9billion in the corresponding period in 2021. This represents a 7.97 percentage decline,” the Insurance Regulatory Authority boss said.

According to insurance regulator, the significant decline in HMOs is as a result of the acquisition of IAA, one of the biggest HMOs by Prudential Life Assurance.

The third quarter report also indicates that micro insurance business generated shs468 million which was a 7.33% decline from shs505 million last year.

“This could, in part be attributed to hardening economic times as inflation continues to make it hard for the population at the lowest levels of the economic pyramid to save,”Kaddunabbi Lubega said.

In terms of market concentration, non-life insurance accounted for 58.5% of the aggregate industry written premiums while Life business accounted for 32.5% of the aggregate industry written premiums in the report period.

The rest of the classes combined (HMOs, Dedicated Health Insurer and Microinsurers) accounted for nine percent of the aggregate premiums underwritten.

Growth in claims payouts

The third quarter according to the insurance regulator saw shs476.52billion was paid out in gross claims during the period, accounting for 44.1% of the industry’s total premium.

This was an increase from the shs363.15 billion in quarter three of 2021.

“The consistent growth in claims shows increased commitment of players to honour their obligations,”Kaddunabbi said.

The quarterly report also indicates that gross written premium collected through the brokerage distribution channel was shs 367.6billion accounting for 27.5%of the total insurance premium during the third quarter of 2022.

On the other side, bancassurance contributed to shs102.44 billion in terms of gross written premium in the third quarter of the year which was a 37.0% growth and an overall contribution of 9.47% to total industry premium.

Outlook

According to the Insurance Regulatory Authority CEO, whereas the macroeconomic fundamentals are not favourable as inflation remains in double digits to affect the purchasing power and constraining savings, the last quarter of the year will see better results in terms of the growth of insurance sector.

 

“Whereas we had projected a 15% growth for quarter three based on the anticipated constraints, 18% was actually registered. We now therefore revise the end of year growth from the earlier projected rate of 12% to 14.2%,” Kaddunabbi said.

He said the projected gross written premium at the end of the year is expected to be at shs.352 trillion.