'AAR leap into general insurance signals new battle for Uganda’s untapped market'

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Uganda’s insurance industry is entering a new phase of competition and capacity growth, with the transition of AAR Health Services Uganda into general insurance.

The firm, long known for its dominance in medical insurance, has now secured a general insurance licence, marking its evolution from a Health Maintenance Organisation (HMO) into a fully-fledged insurer capable of underwriting a wider range of risks.

The move now positions AAR to offer products such as motor, property and liability cover, expanding its footprint beyond healthcare into comprehensive financial protection.

Speaking in an interview, AAR executive director Christine Nassuuna described the milestone as a natural progression in the company’s decades-long journey, which began in 1984 as a Nairobi, Kenya-based medical evacuation service. 

“What started as a response to emergency medical needs has grown into an integrated model that now protects both health and wealth,” Nassuuna said, underscoring the company’s ambition to become a holistic risk management partner.

A sector gaining muscle

AAR’s entry into general insurance comes at a time when Uganda’s insurance sector is witnessing increased capital inflows, consolidation and renewed investor confidence.

Industry experts say the addition of new players into the general insurance space strengthens underwriting capacity and expands consumer choice.

According to Ernest Magezi Barusya, the Chief Executive Officer of Kenbright Uganda, the development is a strong indicator of a growing industry.

“The industry with more players joining the general insurance market has a big impact. It means the market can underwrite more cover and customers have more insurers to choose from,” Barusya explained.

He added that AAR’s established strength in medical insurance could now be leveraged across other segments, enhancing product diversity while raising the bar for service delivery through competition.

Mergers in the Industry

The sector has also recently seen significant consolidation, including the high-profile merger between Sanlam and Allianz, a deal spanning 27 African countries with a combined enterprise value of about $2 billion (about sh7.6 trillion).

Analysts view such developments as a vote of confidence by international investors in Uganda’s insurance market. They say that together, these shifts point to an industry building the scale and financial muscle needed to underwrite larger and more complex risks.

Retention of premiums at the centre

For the industry’s regulator, the expansion of well-capitalised insurers is not just about competition; it is also about keeping more insurance value within the country.

Alhaj Kaddunabbi Ibrahim Lubega, the chief executive officer of the Insurance Regulatory Authority of Uganda, emphasised recently that the importance of strong balance sheets in driving domestic retention of premiums.

“When a company is very strong, with big capital and a large book, it can underwrite big risks and retain much of what it has underwritten instead of exporting premiums,” he said.

This aligns with broader regulatory ambitions to deepen local capacity and reduce reliance on foreign reinsurance markets, a move seen as critical to strengthening Uganda’s financial sector.

AAR’s strategic pivot

AAR said the timing of its expansion reflects both regulatory readiness and internal transformation. According to Nassuuna, transitioning into general insurance required significant capital strengthening, as well as investments in governance systems, operational processes, and human capital.

The company’s new positioning is also being communicated through its “Twongezza Kasukali” campaign, loosely translated as “we have added more sugar”, symbolising an expanded and more comprehensive product offering.

Previously associated almost exclusively with health insurance, AAR is now positioning itself as a one stop provider for integrated insurance solutions.

This shift is expected to unlock new customer segments, particularly corporate and institutional clients that require bundled or large-scale insurance covers.

Existing clients, meanwhile, Nassuuna said stand to benefit from greater convenience, as multiple insurance needs can now be met under a single provider.

Driving digital transformation

A key pillar of AAR’s strategy is its investment in digital platforms, which are expected to play a central role in scaling access and improving customer experience.

Nassuuna said Customers can already purchase medical insurance online, and noted that the company is extending this capability to general insurance products.

“Digital claims processing, allowing users to submit claims remotely, including from accident scenes, has also been introduced to improve efficiency and transparency. This aligns with broader industry efforts to use technology to address Uganda’s persistently low insurance penetration, which remains below 1 percent,” she said.

Nassuuna believes digital innovation, combined with product simplification, could significantly expand access to insurance, particularly among underserved populations. 

Untapped market, Rising opportunity

Low insurance penetration, at less than 1% of the population, has long been viewed as a challenge but is increasingly being reframed as a major growth opportunity.

With a large portion of individuals and businesses still uninsured or underinsured, insurers are now under pressure to design affordable, flexible, and relevant products.

AAR said it is investing in microinsurance solutions aimed at reaching lower-income segments. At the same time, the industry continues to grapple with persistent challenges, including low awareness, trust deficits, and fraud.

Nassuuna said that addressing these issues will require co-ordinated action among insurers, regulators, and consumers.

She stressed that building trust hinges on consistent claims settlement and clear communication, while fraud control demands stronger collaboration across the ecosystem.