Insurance companies pay out shs820.5bn in claims

Insurance companies paid out shs820.47billion in claims in the year ended 2023, the Insurance Regulatory Authority has said.

According to the regulator, the figure represents  51.17% of the total gross written premiums.

According to Al Haj Ibrahim Kaddunabbi Lubega, the Chief Executive Officer of Insurance Regulatory Authority (IRA ), the figure is an increase from the shs618.71billion which was paid in 2022 and Shs 564.82billion paid in 2021.

“Insurance Regulatory Authority  is critical in monitoring claim payouts. Therefore, efficient insurance payment remains crucial to customers which in turn fosters trust,” Kaddunabbi said.

“This year 51.2% of the total gross written premiums being paid out to clients means people are getting value of why they insure. Money is not going anywhere else but putting people back to positions they enjoyed prior to the loss incurred. It discards earlier notion that insurers don’t pay.”

He said this state of affairs will help grow public confidence in insurance and consequently the sector will grow.

Premiums hit shs1.6 trillion

According to Kaddunabbi, overall , insurance companies raised shs1.6 trillion in gross written premiums in the year 2023, representing a 11.29% growth, compared to the shs1.4 trillion collected the previous year.

“This surge reflects heightened business activities, underscoring the sector’s resilience and its pivotal role in the country’s economic landscape,”Kaddunabbi said.

Of the shs1.6 trillion,  non-life insurance accounted for 58.14% which was 4.20 percentage points lower than the market share index of 62.34% in 2022.

On the other hand, life business accounted for 38.14% of the aggregate industry written premiums which was 3.32 percentage points higher than the market share index of 34.82% in 2022.

“The increasing share in life is a key highlight because life insurance is essential in any country as it provides financial security and peace of mind to individuals and their families, ensuring that loved ones are protected from financial hardships in the event of unexpected loss or tragedy,” Kaddunabbi Lubega said.

Health Membership Organizations accounted for 3.52% of the market share, up from 2.66% in 2022.

On the other hand,  Life Insurance business continued to grow much faster than non-life at 21.90% compared to 3.79% of non-life business and HMOs growth by 47.24%.

“The faster rate of growth in life indicates a positive trend towards individuals prioritizing long-term financial security and protection. This shift suggests that people are increasingly recognizing the importance of safeguarding their futures and that of their loved ones, reflecting a growing awareness and readiness to invest in comprehensive financial planning and security measures,”Kaddunabbi said.

Insurance  brokers accounted for shs541.22 billion in gross written premiums compared to the shs453.51 billion generated in 2022 representing a 19.34percentage growth.

This means brokers business accounted for 33.8% of the total insurance premium, an increase by 5.16% from 2022.

On the other side, bancassurance distribution channel accounted for shs179.48 billion compared to shs142.70 billion in 2022 representing a 25.77 percentage growth.

Positive outlook in 2024

Al Haj Ibrahim Kaddunabbi Lubega, the Chief Executive Officer of Insurance Regulatory Authority said with inflation having been contained at an average rate of 3.2 percent in the 12 months leading to May 2024, remaining one of the lowest in the region and annual headline inflation reducing  from the peak of 10.7 percent in October 2022 to 3.6 percent by May 2024, the future looks bright.

“ Such a stable macroeconomic environment is generally favorable for the growth of the insurance sector as it provides a good investment climate as well as impacts positively on the purchasing power of money,” he said.

He said with expected public sector engineering or construction related investments in the first half of 2024/25, the impact of innovations such as marine insurance as compliance improves, and enhanced public trust, among others, they project a positive outlook with growth remaining above 10 percent.