KAMPALA - The executive director of the Insurance Regulatory Authority (IRA), Ibrahim Kadunabi Lubega has urged the insurance sector to invest in modern Information Technology, to reach a larger section of the public and boost performance.
He said limited investment in IT by insurance players has made the sector less visible and attractive, especially to the young generation in a rapidly digitalizing world, affecting its contribution to Gross Domestic Product (GDP).
According to IRA, insurance penetration in Uganda currently sits at 0.73% behind regional neighbors Kenya and Tanzania, with existing plans to grow it to 3% by 2025.
He said investment in IT will help the players to enhance research, develop products that address the needs of their customers and grow their distribution channels.
“When your operations are analogue, management expenses tend to increase and innovation is limited, making premiums expensive.
"To reduce expenses and attract more people, you need to embrace new and cheaper ways of doing business.
"It is a fact that right now, insurers are trailing in the digital world and this means that the public puts insurance at the extreme end of their priorities,” he said, during the inaugural John Sebaana Kizito memorial lecture at hotel Africana on Friday.
Lubega said as the economy grows, insurance players must design relevant products, cognisant that more than 60% of the populations are millennials, whose interests are strongly pegged on digital innovations.
“This is something that needs to be worked on by the people in the industry. Insurance players need to come up with products that address the needs of millennials and low income earners,” he said.
He urged the players to sensitize the public, which according to the finscope survey results is 54% risk averse, even though there are ways of managing risks.
He however, said the current tax regime on insurance products is one of the things that hinder the penetration levels from improving, saying a section of government see it only as a cash cow rather than an enabler of business.
According to the Insurance institute of Uganda, Sebaana Kizito was being remembered for his love and effort to grow the insurance sector in Uganda, having opened the first local private insurance company and mentored a number of people in the sector.
He was also the first president of the insurance institute of Uganda and chairman of the Uganda Insurers’ Association.
The state minister of finance, David Bahati said now that government is focused on economic transformation, the insurance sector must play a pivotal role to build the capacity of local business o thrive.
“We are in a digital era which comes with a lot of risks, and insurance should play a big role in mitigating such risks,” he said.
The executive director of the private sector foundation, Gideon Badagawa said there is need to create awareness about insurance products and how the public can take advantage of them.
He said the government should appoint URA to be a co implementing agency in the local underwriting of marine insurance, with authority to impose penalties, and zero rate VAT for the agriculture insurance premium.
He said all licensing agencies, local governments and authorities should ensure that at the point of application for trade license renewal workers compensation and insurance is made a mandatory requirement.
The executive director of the Insurance Institute of Uganda, Saul Sseremba said there are many opportunities in the insurance sector, especially with the upcoming oil and gas production.