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The Insurance Industry in the year 2015: Achievements, Challenges and Agenda for 2016 – The Regulator’s Perspective
SCOPE
1.Setting the Agenda - Macro-economic perspective2.Industry Achievements
Capacity and GrowthRegulatory developments
Supervision and Compliance3.Agenda for 20164.Conclusion/way forward
While Uganda’s economy remains fundamentally sound, some economic conditions pause significant challenges. The recent economic shocks especially exchange rate depreciation and the resultant inflationary pressures, higher interest rates, subdued fixed investment and weaker consumer spending will ultimately impact on the overall level of economic growth (and ofcourse, Insurance business)
Whereas inflation has remained within the single digit target, it has risen steadily from 1.3% in January 2015 to 8.8% in October 2015 mainly on account of increases in food crop prices and the impact of the depreciation of the Shilling on prices of other goods and services.The outlook suggests that inflationary pressures will persist in the next few months, mainly reflecting the effect of the exchange rate-pass-through. However, Bank of Uganda will continue to tighten monetary policy in order to stem these inflationary tendencies. As BOU tightens the monetary policy, stimulation of production and productivity, value addition and export promotion will be required to stem these inflationary tendencies. Companies have remained very resilient despite the challenges..
2014: QTRS 1–3G.W.P: 290.83Bn
N.P: 160.3BnNet Incurred
Claims:53.5Bn
2015: QTRS 1–3G.W.P: 425.3BnN.P: 253.7BnNet Incurred
Claims:96.7Bn
1) % ▲G.W.P = 462) % ▲N.P = 58
3) % ▲N.I.C = 81
Emergence of new players through M&As (Old Mutual, Prudential, Sanlam General….) what does it mean??
Demonstrated interest in Microinsurance – sooner than later, we shall have companies licensed as specialist Micro insurers.
More Re-insurers establishing presence in Uganda..Increased knowledge about insurance – concerted efforts, though some companies have evidently done much more than others for which they deserve applaud.
Changing perception about insurance and increased acknowledgement about its role in development – increased requests for technical support from Government MDAs as well as NGOs
The establishment of the Department of Financial Services in the MoFPED – policy lobby platform.Increased enthusiasm as Banks prepare to benefit from Bancassurance
Advanced the process of overhauling the Insurance Act (in line with the IAIS ICPs… to take care of issues of corporate governance, risk management, AML..)Advanced the process of overhauling the MTPL Act to revise limits based on an actuarial model, as well as enhance the scope of cover.Microinsurance regulations to cater for the mass market/draft is in place pending legislative approvals.Risk Based Supervision – We rolled out CARAMELS approach of Supervision on some companies and will spread it to others as a step towards RBS.
Rolled out an on-line platform for licensing of insurance Agents - a few challengesEnhanced complaints redress (increased volume of complaints; resolved over 70/156 complaints reported; noted trend of fraud esp. in Motor, Marine & Medical – need for cautious move; some players are reluctant to cooperate; some complaints are trivial … could be resolved at the respective companies customer care/complaints desks)
Improved compliance to established laws and regulations (e.g. improved timeliness of submissions, reduced cases of violations…)
Innovations in products as well as technology (noted a shift towards Microinsurance as companies take advantage of technological advancements – mobile platforms) Just concluded a study on informal insurance in Uganda – It gives important demand side insights (findings to be shared in the first quarter of 2016)
Improved partnerships with Development Partners – IMF & WBSupported arrangements to forming an industrial pool to handle the Oil and Gas risks – we have received commitments to have it running early 2016 (this is long overdue, it must be fast-tracked)
Agricultural Insurance (Together with market participants, we are pushing for a PPP arrangement with regard to Agriculture)Public Awareness (Radio Talk/ TV live shows, News paper publications, literacy campaigns in training institutions, awareness campaigns with market vendors and other SMEs, participation in trade shows and investors’ foras..etc)
Improved working relationships with other Authorities (FIA, URBRA, CMA, BOU, PPDA, …) as well as other MDAs
On an international front, we've continued to participate in regional and international forums to benchmark best practices (EAC Insurance policy - Pass-porting system (one license), EAC Oil & Gas pool, setting up a Financial Services Commission ……etc)
Failure of players to adhere to agreed positions (sharing information on fraud amongst yourselves, and with the regulator, failure to report unhealthy market conduct, brokers clearance .…)
Market conduct issues (Undercutting; premium remittance; claims settlement…..)Reluctance of some players to cooperate on issues pertaining to complaints/claimsIncreased cases of insurance fraud (both policy & Claims)
Compliance gaps (timeliness in submissions, data quality/legitimacy)
Tax regimeAwareness deficitTrust issues
Getting government to insure its key assets and propertiesChallenges associated with enforcement of Workers Compensation Insurance, Marine insurance and MTP (liability) insuranceMacroeconomic challenges (Volatile Forex market, high lending rates, subdued consumption and dampening export and real estate sector....)
Investment in infrastructural projects and Governments commitment to ensuring local contentAn operational oil and Gas pool tapping into the emerging opportunitiesStrong good will of Government to support Agricultural Insurance Strong will to support mechanisms for enforcement of the said lawsPeaceful elections and the associated after-effects (strong growth)
Pursuing the draft legal frameworks through the requisite legislative processesEnhancing internal as well as Industry capacity to effectively move to RBSDeveloping mechanisms to improve enforcement of existing insurance laws Supporting market development and market development initiativesResearch into consumer and related market conduct issuesDeveloping mechanisms to provide facilitative regulation (through among other things, taking advantage of technological advancements).
Instilling market discipline
Not tolerate non-compliance - Act, Regulations, Guidelines (no tolerance for customer detriment; more credible deterrence)Continue to Strictly monitor compliance with established standards with regard to Premium remittances and commission payments, Claims settlement, dispute resolution..etcCONTINUE WORKING WITH YOU INDIVIDUALLY AND COLLECTIVELY FOR THE BETTERMENT OF THE INDUSTRY!!!!!!!!!
