Insurers tipped on vast opportunities in tenfold growth drive
According to Muvawala, the transformation of the economy will create insurance opportunities across entire productive value chains rather than only around individual assets.
Dr Joseph Muvawala, National Planning Authority Executive Officer. (File photo)
________________
Uganda’s ambition to grow its economy tenfold by 2040 is creating a vast new market for the insurance industry, Dr Joseph Muvawala, National Planning Authority Executive Officer, has told sector CEOs.
Dr Muvawala told insurance industry leaders during the Insurance Regulatory Authority CEO breakfast meeting held at Kampala Serena Hotel last week that the sector could no longer afford to operate as a peripheral service to Uganda’s economic transformation.
“This is not an incremental adjustment to the existing economy. It requires a sustained increase in productive investment, value addition, exports, technology, infrastructure, domestic savings and private capital. Uganda cannot build a $500b economy using the risk capacity of a $50b economy,” Muvawala noted.
According to Muvawala, the transformation of the economy will create insurance opportunities across entire productive value chains rather than only around individual assets.
The opportunity, he argued, extends beyond the four priority sectors because the infrastructure supporting them will itself require extensive insurance protection.
“How will agro-processing, tourism, mining or technology expand without reliable energy, transport, finance, urban infrastructure and manufacturing capacity? These enabling sectors will require construction and engineering insurance, performance guarantees, catastrophe protection, property cover, business-interruption insurance and protection against supply-chain and liability risks.”
Muvawala said insurers should therefore stop viewing their market through individual policies and instead consider the risks running through complete economic value chains.
“In agro-industrialisation, for example, does the risk end when produce leaves the farm? It does not. The risk continues through storage, processing, transportation, export and payment. The same applies to tourism, minerals, oil and gas, and technology.”
He urged insurers to develop “integrated solutions for complete value chains rather than offering isolated policies for individual assets.
He said insurers must also decide which risks can be retained within Uganda and which would have to be transferred to international reinsurers.
Dr Sande Protazio, Acting Chief Executive Officer of the Insurance Regulatory Authority, said the opportunities created by the ten-fold growth strategy should be viewed as a collective responsibility rather than an assignment for the government alone.
He said the insurance industry was particularly well positioned to benefit from the transformation because economic growth would generate new assets, businesses and households requiring protection.
“From the interactions and the literature, we've come across, the opportunities seem immense. Because agriculture is becoming more industrialised and commercialised. Tourism and industry are expected to expand. Infrastructure is expected to expand. And we expect to see more households becoming more or entering the modern economy.”
He said those developments would place a responsibility on insurers to ensure that economic expansion was adequately protected.