The insurance sector has been challenged to increase its contribution to the economy and position itself for a five hundred-billion-dollar economy under the Tenfold Growth Strategy.
The industry currently generates about 2.02 trillion shillings in Gross Written Premiums annually and has been growing by between 10 and 12 percent. However, the National Planning Authority says the size of the industry remains small when measured against the size of the country’s economy.
NPA Executive Director Joseph Muvawala says insurance will be critical to mobilising capital and reducing risks associated with investments in agriculture, tourism, mining, oil and gas, and science, technology and innovation.
He was speaking to chief executives of insurance companies in Kampala on Wednesday about opportunities for the sector under the Tenfold Growth Strategy.
Muvawala says the government intends to introduce incentives to encourage the insurance industry to play a bigger role in financing and de-risking investments.
He says the insurance industry should not wait for projects to be completed or losses to occur before offering its services. Instead, Muvawala says insurers should be involved at the planning stage of major investments.
The Fourth National Development Plan, NDP4, identifies agriculture, tourism, mineral-based industrial development including oil and gas, and science, technology and innovation as priority growth areas.
Its Projects Investment Plan contains 803 high-impact projects that Muvawala says present opportunities for the insurance industry.
Muvawala also cited the Agriculture Credit Facility and the Uganda Agriculture Insurance Scheme as examples of government programmes intended to reduce risks and expand access to finance for farmers.
He acknowledged complaints about inadequate access to financing and said government would consider increasing resources to the programmes.
The Insurance Regulatory Authority Acting Chief Executive Officer, Protazio Sande, agrees that the sector’s contribution remains low, saying more needs to be done if insurance is to become relevant to Uganda’s ambition of building a 500-billion-dollar economy.
Sande attributes the recent growth of the sector partly to innovations in insurance products, marketing and improved claims payments, which he says have helped strengthen public confidence.
However, he says reluctance to take up insurance, particularly life insurance, remains a major challenge.
Sande says life insurance is particularly important because it can mobilise long-term capital, unlike non-life insurance, where policies are generally shorter term.
He supports the proposal for the government to insure more of its assets, arguing that this could significantly increase insurance penetration because the government is one of the country’s largest investors and asset owners.
Muvawala says the NPA will prepare a paper and facilitate an engagement between the insurance industry and the Ministry of Finance, Planning and Economic Development on possible measures to support insurers and increase their participation in Uganda’s development agenda-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
