Bancassurance: Banks urged to create more tie-ups with insurers

Insurers and banks have been urged to create more tie-ups to collectively facilitate the accessibility of the vital service, as well as develop better marketing strategies to reach citizens and meet their needs.
Speaking during the inaugural bancassurance Thought Leaders’ forum at Kampala Golf Course Hotel, Tumubweine Twinemanzi, the Executive Director in charge of Bank Supervision at BoU said by insurance companies utilising banks as an additional distribution channel for their products, both sectors can benefit.
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“Banks should be sensitive to consumer needs. Today’s consumer for financial services is no longer one who focuses on banking services and insurance services as being separate. Take an example of an Iphone which has entertainment, financial services, books and many others, similarly, banks should be able to do this,” Tumubweine said.
He said financial institutions need to work more closely with insurers to ensure that insurance services trickle down to the people so that they enjoy the untapped benefits in the sector.
The CEO of the Insurance Regulatory Authority, Al Haj Ibrahim Kaddunabbi Lubega said whereas some strides have been made in terms of bancassurance, more is still needed to be done.
He mentioned that last year, bancassurance distribution channel accounted for shs179.48 billion compared to shs142.70 billion in 2022 representing a 25.77 percentage growth but said there is room for improvement.
“Banks deal in money and things which are of value and insurance on the other hand protects that value.No body else needs insurance than the banks and their customers. We have in many instances strived to look for money and wealth but in many of these instances, we have attached less value to protecting that wealth. Insurance is one way to make sure as we strive to make money, we protect it,” Kaddunabbi said.
“Therefore, bancassurance is one of key enablers where banks use data available and can get customers who are not with them to get service of banks.”
He said that partnership between insurers and banks leads to a strong relationship between two critical financial players
“I call upon leadership of various banks to give more space for bancassurance and train more people for bancassurance .”
Wilbrod Owor, the Executive Director, Uganda Bankers Association said the first ever bancassurance Thought Leaders’ forum was used to take stock of what has been achieved since 2017 with the enactment of the Financial Institutions Amendment Act, 2016 .
“It has been eight years since then. Bancassurance is growing but insurance penetration is still low. With this function, we wanted to hear from customers on how they see things and drive what we should then do as an industry,” Owor said.
He said during the forum, it was agreed that there is need to leverage technology by both the bankers and insurers to reach customers faster, 24/ 7.
“SMEs can also be reached through technology. Because financial institutions have a lot of information about customers, they know their needs and transactions, additional cover through insurance puts it together and using technology to reach them would be faster.”
Martha Aheebwa, the Head of Bancassurance at Standard Chartered Bank Uganda said in the past, there has been a challenge with trust between the two sectors.
“Our initial approach to customers speaking about insurance indicated that customers have a negative perception of an experience they have heard from someone. This has been a stumbling block. However, with this forum, we have learnt to leverage on the relationship that we have with customers on the fact that they know we care about them and selling them an insurance solution we feel speaks to their needs,” Aheebwa said.
She said banks ought to be more proactive in terms of product developments to suit customers’ needs using the data they have.