Dr Fred Muhumuza, a renowned economist and researcher, has urged the insurance industry to be inward-looking as opposed to quoting global statistics and standards when seeking solutions to grow their reach.
“We need to include local and contextualized indicators of trends to pursue and monitor progress as well as design suitable products,” he said, noting that Ugandans trading in South Sudan and most recently Rwanda would not have been seeking government help had they taken up political risk insurance policy.
Muhumuza was speaking at the recent first annual insurance brokers conference, held at Hotel Africana. Insurance penetration in Uganda remains low, with available figures pointing to a coverage of just less than one per cent. There have been numerous efforts to grow that number, especially in information dissemination.
Muhumuza advised that an adaptation of local languages to simplify terms like “indemnity” would go a long way in winning over a new crop of customers like low-income consumers, under the microinsurance platform. He added that the insurance industry needed to build more trust among the public if they are to grow their premiums.
“Building and strengthening trust is very important as studies indicate that many consumers are apprehensive about trusting financial institutions; with trust in insurance ranking lowest in some case. So, it is important that you do not allow a few bad apples to sour the image of the entire industry.”
Muhumuza also touched on the growing trend of digital, where consumers are looking for hassle-free products to sign up to.
“New products that are fit-for-purpose should be introduced as they are tailor-made for the local informal businesses. We also need to allow the premium to match the business operations and associated risks like designing versions of comprehensive motor vehicle insurance pegged to travel times as happens with foreign travel insurance to design,” noted Muhumuza.
Insurers, Muhumuza said, needed to understand that many clients faced a wide array of short and long-term financial challenges such as paying rent, wages and taxes. By so doing, they would be able to suggest solutions centered on managing their customers’ financial wellness, as opposed to presenting them with a basket of off-the-shelf products.
He called on the Insurance Regulatory Authority (IRA) and the Uganda Insurance Association (UIA) to lead research and information sharing on changing market conditions, benefits and impacts of insurance.
“Is regulation responding to other actors who provide insurance like taxi drivers or boda boda groups that offer welfare services to their members? What of linking the insurer and the insured through internet? How are we dealing with associated risks of cybercrime?” Muhumuza asked.