Understanding the obstacles to the growth of the insurance industry in Uganda

Abstract

The study analyses the obstacles to the growth of the insurance industry in Uganda. Growth is conceptualized as the level of development of the industry in general, in terms of premium profitability, availability of the service market and claims settlement capacity.

The central question of this study was: What are the key constraints to the growth of the insurance industry in Uganda? To answer the question, four specific objectives were formulated: These are (1) To examine the role of government legislation in promoting or blocking the growth of the insurance industry in Uganda. (2) To analyze the public attitudes towards the insurance industry and the effects of these attitudes (both positive and negative) to the insurance service market. (3) To examine the insurance underwriting processes and management practices. The aim is to understand the contribution of underwriting and management practices to the growth rate of the insurance industry in Uganda. (4) To make some recommendations for deepening the insurance industry in Uganda.

A detailed study was carried out in Statewide Insurance Company Limited and United Assurance Provincial Insurance Uganda Limited. The clients and prospective clients also participated in the study. This is not to suggest that the obstacles are only peculiar to the two insurance companies. Rather, I focused on these because Statewide Insurance Company Limited is one of the surviving Ugandan insurance companies; while United Assurance Provincial Insurance Uganda Limited is an important foreign insurer. Interviews, documentary sources and open-ended questions were used, since the research is largely a qualitative study. Quotations from key respondents were used in data analysis.

A key finding of this study is that government laws in regard to insurance were not effectively implemented. This appears to have arisen from weak supervision. Second, the public generally has a negative attitude towards the insurance industry. This seems to negatively affect the market base of insurance in Uganda. Third, the findings revealed the availability of incompetent insurance underwriting processes and management practices.

The study recommends substantial improvements in the government’s implementation and supervisory capacities. Insurers have to sensitize the public about the importance of insurance services. However, the insurance companies themselves have to dramatically improve their professionalism and efficiency in claims settlement.