By Kumar Sumit Gaurav
Insurance serves as a cornerstone for economic stability and wealth creation in different ways, but primarily by offering individuals and businesses a safety net against unforeseen events.
In Uganda, regrettably, insurance penetration remains alarmingly low, with rates below 1%. This stark contrast with regional and global averages8 highlights a significant gap in financial protection for citizens.
To understand the role that insurance plays in fostering economic stability you need not look far and wide.
At the family level, insurance provides financial support during critical times such as illness, disability, or death.
In the event of the policyholder's untimely death, the family receives the full sum assured which is an agreed amount before the inception of the contract, safeguarding them from financial distress.
Despite this clear benefit, many Ugandans remain unaware of the value proposition that insurance offers.
Besides individual protection, insurance fosters a culture of long-term saving and investment.
In Uganda, the propensity for long-term savings is relatively low, with only about 1.3 million people actively contributing to the National Social Security Fund (NSSF).
Encouraging even modest daily savings can, over time, accumulate substantial wealth due to the power of compound interest.
Products like Jubilee's Personal Pension Plan exemplify how structured savings drive long-term financial growth. With a guaranteed minimum return of 5 %, the plan has consistently delivered higher returns, making it highly competitive. Investing in such a solution not only grows wealth but also secures one’s financial future.
On a macroeconomic scale, insurance companies collect premiums that are predominantly invested in government securities and bonds. These investments finance infrastructure projects and other developmental initiatives, thereby stimulating economic growth.
Additionally, the insurance sector generates employment opportunities; for example, Jubilee Life Insurance Uganda has expanded its workforce to over 100 employees in response to business growth.
Impact of Tax Policies on Insurance Penetration
Tax incentives have proven effective in boosting insurance penetration globally. In India, for example, individuals can reduce their taxable income by the amount spent on life and health insurance premiums, up to a defined limit, making insurance more affordable and driving uptake.
In Uganda, however, the current tax structure lacks similar incentives. Introducing tax deductions or credits for insurance premiums could make products more accessible and increase market penetration. Additionally, launching a short-term infrastructure bond with guaranteed returns could offer insurers a new investment stream.
We are actively engaging with the Ministry of Finance, the Uganda Insurers Association and the Insurance Regulatory Authority to advocate for these changes.
Our goal is to support the development of policies that encourage insurance uptake, enhance financial inclusion and drive economic growth.
Through strategic partnerships and targeted awareness campaigns, we can create a more secure and prosperous future for all.
Kumar Sumit Gaurav is the Chief Executive Officer of Jubilee Life Insurance Uganda