In 2022, microinsurance companies generated sh0.611b marginally reducing from sh0.657b in 2021.

This is a seven per cent decline in performance, according to Alhaj Kaddunabbi Ibrahim Lubega, the chief executive officer of the Insurance Regulatory Authority of Uganda.

He made the revelation while announcing the 2022 insurance industry performance recently in Kampala. 

Additionally, microinsurance accounted for 2.7% of the market share, compared to 4.2% in 2021.

Kaddunabbi said the reduction in growth may be attributed to competitive pressures on incomes especially at the lower income pyramid brought about by increasing costs of living.

He said the authority shall continue to examine this area with a view of identifying key interventions owing to the critical importance of the segment.

Sector performance

Uganda’s insurance industry remained on a positive growth trajectory in the year 2022, with Gross Written Premium (GWP) growing from sh1.183 trillion in 2021 to shs1.425tn in 2022.

This posting is a 20.4% growth, according to the 2022 performance results. The sector also scored a 9.34% in 2020, which grew to 10.61% growth rates registered in 2021 and 20.4% in 2022.

According to Kaddunabbi, this impressive growth is evidence of recovery of business activity from the effects of Covid -19 pandemic.

Of the sh1.425 trillion, non-life business generated sh818.7b in GWP (up from sh706.7b in 2021) representing a 15.8% growth in premiums and accounting for 57.7% of the market share (59.8% in 2021).

Kaddunabbi said the growth rate in premiums of 15.8% registered in 2022 is significantly higher than the 6.25% which was registered in 2021.

In the year 2022, a total of 2,475,657 Ugandans were covered. 

Considering UBOS’ estimated population of 45.5m, uptake is 5.4% of the total population.

This means that insurance penetration slightly improved by 0.08% from 0.796% in 2021 to 0.876% in 2022.

However, Kaddunabbi said the penetration continues to be depressed by the spread effect of double rebasing of the National GDP over the last 10 years (2014, and 2019).

Sector outlook

Uganda's economy weathered successive shocks in 2022 with GDP growth expected to recover to 5.7% during FY23.

A post-COVID-19 recovery in services and industrial sectors offset the weather-induced decline in agriculture, registering a growth in premiums of 20.4% over the reporting year.

The Ministry of Finance, Planning and Economic Development (MoFPED) forecasts show that inflation will average between 6% and 8% in 2023, compared to an average of 7.2% annual headline in 2022.

Inflation is expected to revert to the medium-term target of 5% by end-2023. The reduction in inflation if sustained will catalyse growth and demand for insurance.

According to Kaddunabbi, the first quarter of 2023 in the insurance sector already paints a picture of better performance, as sh473.8b was already registered in Q1, 2023 compared to sh412.5b in Q1, 2022. This is a 14.9% growth already.

The following are expected to drive the growth of the insurance sector in 2023.

• Life – both group and Individual
• Enhanced Risk awareness
• Public sector engineering/construction-related investments in the first half of 2023/24
• Marine Insurance as compliance improves
• Medical Insurance
• Emerging sector opportunities especially in Oil and Gas
• Growth in premiums from Agriculture as agriculture insurance gets incorporated in the Parish Development Model (PDM)
• Enhanced awareness
• Enhanced public Trust resulting from strengthened Complaints redress mechanisms (including now, the operationalisation of the Insurance Appeals Tribunal).

In the short-to-medium term, more attention will be paid to claims and claims processes to ensure that all payable claims are paid (and in time) according to Kaddunabbi.

“We shall also engage Micro-Insurers and HMOs to understand their predicament and determine how to intervene in view of their critical importance,” he said.