Insurance claims of up to sh820 billion paid out in 2023
IRA Chief Executive Officer, Ibrahim Kaddunabbi Lubega
Kampala, Uganda | THE INDEPENDENT | Insurance companies in Uganda paid out over 820.1 billion shillings to various customers in claims in 2023.
The Insurance Regulatory Authority of Uganda (IRA) said the payments amounted to more than half (51.17 percent) of the total amount of money that the insurance policy holders paid to the insurance companies (Gross Written Premiums).
The payments saw an increase by a third compared to the claims paid out the year before, which amounted to 618.71 billion, according to the Insurance Sector Performance report for the year 2023.
IRA Chief Executive Officer, Ibrahim Kaddunabbi Lubega, says the sustained and high increase in the payouts is due to the policy measures aimed at ensuring that no insurance company fails or refuses to pay a claim without a genuine reason.
Kaddunabbi Lubega however said his Authority is also aware of fraudulent claims which they have to guard against. He revealed that many have been arrested and prosecuted.
He said the refusal to pay a genuine claim violates the industry objectives and can attract sanctions.
Haji Kaddunabbi says that the focus on claim payments by the industry was informed by the fact that when the public feels the insurance companies are reluctant to pay, they also lose the trust in the industry as not meant to serve the needs of the civilians.
This, according to him, is a major reason why insurance penetration in Uganda has remained low, below 1 percent for long.
Kaddunabbi Lubega delivered the performance of the industry over the last year.
He says it is wrong for companies and their shareholders to use most of the premiums other than for paying out claims, adding that previously the level was as low as 20 percent.
Francesca Nakaggwa, the head of the Insurance Appeals Tribunal also notes that the increase in claims was because more people are now aware of their rights to claim when they incur losses, as shown by the complaints on her desk.
Over the year, Gross Written Premiums rose from 1.44 trillion to 1.6 trillion shillings, with non-life businesses accounting for 932 billion shillings, though its share of the business declined to 58.1 percent from more than 62 percent the previous year.
This was because of the fast-increasing uptake of Life insurance products, which amounted to 611 billion shillings, up from 501.6 billion.
This was a share of 38 percent, up from 34.8 percent in 2022. Other segments also saw better performance, with Health Membership organizations generating 56.3 billion shillings, up from 38.2 billion shillings a year before.
Kaddunabbi hails the trend when life insurance is becoming the leader, saying this is because people are becoming more aware of the importance of life insurance.
Mostly, however, he says that Life is a good source of long term capital.
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