It will take mass uptake and innovation to lift insurance performance, according to Mr Joseph Almeida, the Liberty Life Assurance managing director.
According to Insurance Regulatory Authority (IRA) insurance profitability, particularly of non-life, the biggest premium contributor, fell by 14 per cent in 2017, due to increase in claims.
The reduction, according to IRA, calls for serious engagement from insurance firms to innovate and build products that are relevant to the market.
Mr Deepak Pandey, the Jubilee Insurance managing director, told Daily Monitor last week the reduction was a global trend that will need insurance firms to only innovate but cut administration costs.
However, for Mr Almeida, it will take more than just that and insurance firms need to interest themselves in mass roll out, which will reinvigorate a sector whose penetration has stagnated at less than 1 per cent.
Mr Almeida says Liberty has already taken on the innovation path by introducing new products such as the education policy to lift the school fees burden off parents and guardians.
A recent study conducted by the insurance firm, he says, revealed that education is a costly investment that needs alternative support. At 0.76 per cent, Uganda has the lowest insurance penetration in East Africa and the growth over the years has been dismal.
And players in the sector believe innovation in social services such as education will be the only way through which penetration will be boosted.
“The penetration has actually gone backwards over the last two years,” says Mr Almeida but shows optimism banking on the rollout of bancassurance.
“Banks are coming up with their own plans all that [are likely] to help in market penetration,” he says.
However, the game changer, he says, will be the rollout of a national health insurance scheme.
“Definitely life will never be the same for the entire insurance industry in the country,” he says.
Currently, it is only a section of working class that has benefits as described by the National Health Insurance Scheme, which is still before Parliament.
Informal sector. Beyond innovation, government needs to work with insurance firms to bring the informal sector, which makes up nearly half of the economy, on board.
Government involvement is important to leverage cost as there is need to make schemes affordable. Also distribution needs to be worked out as it plays a key role in deepening penetration.
Not to be a conduit for money laundering, industry players such Mr Almeida, believe insurance products do not end up being a channel for cleaning illicit money.
“So anti-money laundering laws are becoming a major focus and we are going to try to work with all those involved and see how best we can make it easy to access savings without putting people doing business the right way through a lot of due diligence,” he says.
Consumer awareness and transparency is crucial for it is at the heart of deepening penetration.