BUSINESS | BANCASSURANCE | BANKING

The advancement of Bancassurance and its adoption by commercial banks in Uganda will supplement the role played by insurance brokers and consequently lead to an increase in insurance penetration.

According to Ibrahim Kaddunabbi Lubega, the Chief Executive Officer Insurance Regulatory Authority of Uganda, bancassurance is an arrangement between a bank and an insurance company, through which the insurer can sell its products to the bank's customers and a bancassurance agent is a duly licensed bank by the Insurance Regulatory Authority to conduct bancassurance business.

Their presence does not impact the role of the insurance brokers because a bancassurance agent is mandated to sell insurance to only their clients while an insurance broker sells insurance products to everybody and is not restricted.

“In other words, bancassurance refers to a relationship between a bank and an insurance company that is aimed at offering insurance products or insurance benefits to the bank’s customers. In this partnership, bank staff and tellers become the point of sale and point of contact for the customer,” Kaddunabbi says.

Bank staff are advised and supported by the underwriter at the insurance company through wholesale product information, marketing campaigns and sales training.

The bank and the insurance company share the commission. Insurance policies are processed and administered by the insurance company.

He appreciates the efforts being undertaken by commercial banks to be one-stop centers for all their customers’ needs.

He also calls upon banks that are yet to come on board to do so, not only to boost insurance penetration but to also increase their profitability by providing an additional revenue stream.

“Bancassurance managers at the different banks should pick interest and encourage the bank agents to take up bancassurance as a way to increase insurance distribution in the country,” he advises.

 “We continue to pledge our commitment to providing the required support to nurture this very promising distribution channel. However, as you engage in this business ensure you acquaint yourselves with the regulations so that you do not compromise with claim settlement and delivery so that customers get value for their money,” he further advises.

Anthony Kituuka, the Executive Director Equity Bank says before rolling out the bancassurance project, banks should make sure that they develop the right infrastructure that will enable them to thrive.

He said their focus is to provide solutions for everyone including SME’s, Corporate entities as well as government because Equity Bank has built distribution channels capable of delivering their services to the final man on the ground.

“Our purpose is to transform lives, give dignity and expand opportunities for wealth creation by providing financial and insurance solutions to everybody. We are grateful that we have been licensed to join the bancassurance business,” he said while receiving the bancassurance certificate from the regulator recently.

Bancassurance contributed shs103.5b to the Shs 1.1trillion Gross Written Premium (GWP) recorded by Uganda's insurance sector in 2021.

To be licensed as a bancassurance agent a financial institution that seeks to conduct bancassurance business must make an application to the Authority for a license to do so under the Insurance (Bancassurance) Regulations, 2017.

The license application shall be accompanied by: 

• (a) a resolution of the governing body of the financial institution that the financial institution may conduct bancassurance business
• (b) a letter of no objection issued by the Bank of Uganda
• (c) a bancassurance agency agreement between the financial institution and insurers (Minimum of four non-life insurers and two life insurers)
• (d) applications of the persons to be authorised to act as the Principal Officer; and specified person of the bancassurance agent and the branch they are to operate from, made using Forms downloadable and accompanied by their curriculum vitae and academic qualifications, together with other requirements as listed in Regulations 8 and 9
• (e) a duly filled fit and proper requirements questionnaire for the principal officer, downloadable here
• (f) evidence of professional indemnity insurance (a policy sum insured of at least sh100,000,000/=) and fidelity guarantee insurance for the principal officer and the specified person
• (g) evidence of payment of an application fee of Shs 500,000/= to the Authority (This is payable once at first licensing and is non-refundable)
• (h) evidence of membership to the Insurance Institute of Uganda (Membership fee of Shs 1,000,000/=). 
• (i) The bancassurance agent shall be required to pay an annual compliance fee of Shs 1,000,000/= and 
• (j) any other information/documents that the Authority may require (This shall be specified in writing after receiving the license application). 

Additionally, please note that the office premises where the bancassurance shall operate shall be inspected.