Commercial banks' written insurance premiums are on steady increase hardly three years after the banking law allowed banks to distribute insurance. The Insurance Regulatory Authority says the insurance premiums from Bancassurance now stand at slightly above twenty-six billion Shillings from zero in August 2017 when the Bancassurance regulations were effected. Josephine Mutabuza, Bancassurance expert with Barclay Bank says the performance shows that banks can earn non-interest revenue from Bancassurance. On the positive side, the increase in premiums shows that banks can act as alternative insurances distribution channels in an area previously dominated by insurance firms and their brokers. About eighteen commercial Banks are now licensed to offer Bancassurance service. There only two banks distributing insurance services in 2017 when the Insurance Regulatory Authority and the Central Bank started implementing the Financial Institutions Amendment Act in 2016 in relation to Bancassurance. Mutabuza says admits the Bank's venture into the insurance industry is likely to turnaround the way insurance services in the country. But the Insurance Broker's Association of Uganda is beginning to feel the pinch as more banks take on insurance distribution. The Insurance Brokers Association Chairman, Solomon Rubondo says some of its members are losing some of their businesses to the Banks who he says seem to be acting as insurance brokers too. While the Association's Chairman, Solomon Rubondo denied that there is an emerging rift between the banks and insurance brokers, he said Bancassurance has created what he called a disruption. While the banks argue that the twenty-six billion shillings earned from written premiums in 2018 were from new business, Rubondo thinks the earnings were from clients shifting from Insurance brokers to Banks. He says his Association is documenting a case where its members are losing business. Rubondo says the composition for new business is so small compared to what banks earned from Bancassurance. Ronald Bantanda, the Chief Executive officer of Sky Reinsurance told URN that there were indeed some challenges to the insurance brokers as Bancassurance takes root in Uganda. He says while there seems to be a level playing field, it will be up to the insurance consumer to take a decision on who should provide them with the needed service. He argues that there are certain lines of insurance where banks will not be able to venture into because of the lack of the required expertise and experience. He says while the banks may take of the clients being served by the brokers, they(Banks) will need to understand what he calls the customer journey from a broker's perspective. Insurance Regulatory Authority Chief Executive Officer, Ibrahim Lubega Kaddunabbi in an interview said there should be a reason for a rift between the Insurance Brokers and banks. He says Bancassurance products should be bout through banks just like those offered through insurance brokers. Parliament in January 2016 passed the Financial Institutions Amendment Bill into law allowing insurance companies to use banks as a distribution channel for their services. It was hoped that Bancassurance would create opportunities for growth for both the insurance and banking sectors. Uganda still has the lowest insurance penetration in east Africa at 0.8 percent of the population lowest compared Kenya's 2.93 percent, Tanzania's 0.9 percent and Rwanda's two percent. One of the industry players that asked for anonymity said Bancassurance should be embraced by all Ugandans as long as it can be used to increase the number of Ugandan taking insurance cover. The source said both the banks and Insurance brokers should strive to ensure that Ugandans are educated about the benefits of insurance. Source: Independent
