Ugandan businesses are prone to risk

Many Ugandans are yet to trust insurance policies let alone understand how they work. New Vision speaks to Paul Kavuma (pictured), who is the Chief Operations Officer at Goldstar Insurance Company Ltd, about insurance.

Q:  Most Ugandans have resentment and mistrust towards insurance. How can this be mitigated?

A:  Insurance is a broad concept and certainly should be even bigger in a country like Uganda where the pre-disposition rate to the various risks is on the higher side. So essentially it is an ideal requirement for one to survive in business. The perceived mistrust is a concept unfortunately seems to be engrained in our business cultures. And this is more often created by lack of product knowledge.

It is now incumbent on us as insurance players to mitigate this by managing the customer’s expectations from day one as well as providing and explaining the proverbial fine point.

Treating the customer like a best friend is as such a very crucial component in selling insurance since ours is a service on a piece of paper to creating a promise for future indemnity.


How do you assess the need for insurance uptake in Uganda?

In a country like Uganda, the need for the uptake of insurance is enormous. There are so many risks that people and businesses encounter on a daily basis.

An insurance company generally takes up the risk of loss and compensates you where a complete loss could have been met.

Insurance is equally vital in the process of capital development for the business communities. Against an endowment policy that has a life cover, one can obtain a loan from a financial institution. We also protect your assets against unforeseeable risks such as fire and burglary.

Nevertheless, insurance penetration in Uganda is less than 1% of GDP and this is because we have not as an industry packaged our products in an appealing way to the public. An average person must know the benefits of insurance and we must also make it affordable for them to buy. We now need to get to a level where insurance is a lifestyle like the ATM card in anyone’s wallet.


What considerations must one put in mind when choosing an insurance company?

The appreciation of risk and its adverse effects in anybody’s mind should create an immediate need to look for insurance as a starting point.

We have a variety of products on the market but the conventional practice of selling what is available is no longer viable.

The parameters of choosing an insurance company can both be personal or scientific.

First impressions matter a lot and will speak volumes of the future business relationship; we all want to deal with pleasant people since the service is now personalised and tailored to a specific need. More often ones experience leads to a referral; this is key very key in our service industry.

A number of other factors can be looked at in the choice of an insurance service provider. For example, the solvency margins of the company, which outrightly signifies their ability to meet liabilities as and when they fall due.

Clients should also check for the company’s reinsurance capacity with renowned re-insurers because even insurance companies need to insure their business portfolios.

It is also important to check for the company’s level of accreditation because this is very important in the choice of a service provider.


What are some of the most sought after insurance products in Uganda?

Motor insurance is definitely the most sought after product, contributing a significant chunk of the entire industry’s production.

It is still the predominant earner for any insurance company.

Other classes that touch and concern our welfare and wellbeing like medical insurance are also on the rise and this is can be attributed to the growing middle class in the country. In 2013, for example, this class alone accounted for 11% of the industry’s growth.


How can legislation help in increasing insurance penetration?

The growth of the industry has got a lot of potential and legislation can only assist to propel this if we have designed user– friendly and easily assimilated products that provide an immediate and tangible benefit.

To free up the compulsory workers savings with the National Social Security Fund to provide a variety is one such opportunity and similarly the legislation on bank assurance to authorise banks to act as a conduits of insurance services will greatly increase the penetration levels.

We commend the Insurance Regulatory Authority and Uganda Insurance Association for their current initiative to review and make the provisions of the Motor Third Party more relevant to the end user; now that will be tangible result.


What does workman’s compensation cover?

The policy is provided for and guided by the provisions of the Workers Compensation Act 2000 and makes it compulsory for all employers to insure their all employees against injuries and accidents while at work.

The provisions of the Act in tandem with our written policies provide cover from the time employees leave their places of abode to work, whilst at work and the return journey. In essence it provides cover for the employee for as long as the employee is engaged in a work–related activity at all times.

The policy also benefits their bonafide dependents considered and named as beneficiaries in the event of a demise. The same policy provides cover for illness or any occupational hazard that are work related and defined under the Act.