The Insurance Industry in the year 2020: Achievements, Challenges and Agenda for 2021

ALHAJ KADDUNABBI IBRAHIM LUBEGA CHIEF EXECUTIVE OFFICER

26th November 2020

1 DRIVING GROWTH [email protected] Presentation Outline

1. Introduction – Situating the sector in a Macro Economy 2. Performance highlights – up to Q3, 2020 3. Highlights of Market Developments and Achievements 4. Agenda for 2021 5. Conclusion/way forward

2 DRIVING GROWTH [email protected] Macro Economy (1/4) 1. GDP performance Growth of 3.1% registered in FY 2019/20 compared to 6.8% in FY 2018/19, much slower than the previous year largely due to the reduced global demand following the Corona Virus outbreak that began late last financial year (See table below) 2018/19 2019/20* (preliminary) GDP at Constant prices (in 122,494 126,258 Billion UShs) GDP growth rate (%) 6.8 3.1

3 DRIVING GROWTH [email protected] Macro Economy (2/4)

2. Sub-Sector performance I. The gross valued added for Agriculture, Forestry and Fishing activities grew by 4.2 percent in 2019/2020 compared to the growth of 5.3 percent registered in 2018/19. II. The overall industry sector registered a slowdown in growth by 2.3 percent in 2019/2020 compared to the growth of 10.1 percent registered in 2018/19. III. The services sector registered a slower growth of 3.6 percent in 2019/2020 compared to the 5.7 percent growth in 2018/19. IV. Taxes on Products declined by 1.3 percent in 2019/2020 following a growth of 5.8 percent in 2018/19.

4 DRIVING GROWTH [email protected] Macro economy (3/4)

3. Sectoral Contribution to GDP Sector 2018/19 2019/20 Agriculture 23.1% 23.7% Industry 26.4% 26% Services 43% 43.6% Taxes on 7.5% 6.8% products

5 DRIVING GROWTH [email protected] Macro economy (4/4)

4. Declining inflation Annual headline inflation averaged at 3.0% for the FY 2019/20 compared to 3.1% in FY 2018/19. This was mainly due to a reduction in core and Energy, Fuel and Utilities (EFU) inflation. 5. Interest Rates Following a low and stable inflation outlook in 2019/20,the CBR was reduced to 9% in October 2019 in order to boost private sector credit growth so as to strengthen the economic growth momentum. As a result, lending rates also declined slightly to 19.8% from an average of 20% in 2018/19. Going forward interest rates are expected to remain relatively stable supported by accommodative monetary policy as well as low and stable inflation outlook.

6 DRIVING GROWTH [email protected] Highlights of Market Dev'ts and Achievements in 2020

7 DRIVING GROWTH PERFORMANCE HIGHLIGHTS - Aggregate Performance, as at Q3 2020 (1/2)

Item Non-life Life HMOs Micro Insurer Total (000 shs) (000 shs) (000 shs) (000 shs) (000 shs)

Gross Written premium 524,856,829 237,589,908 55,901,292 373,954 818,721,983

Premiums ceded 235,622,941 25,431,513 6,430,679 35,234 267,520,367

Net Written premium 289,233,888 212,158,394 49,470,613 338,721 551,201,616

Net earned premium 264,003,257 212,158,394 48,558,487 193,094 524,913,233

Net incurred claims 112,566,488 82,154,673 30,767,483 44,700 225,533,345

Cession ratios 44.89 10.70 11.50 9.00 33.00

Retention ratios 55.11 89.30 88.50 91.00 67.00

Loss Ratios 42.64 38.72 63.36 23.15 41.97 8 DRIVING GROWTH [email protected] PERFORMANCE HIGHLIGHTS - Aggregate

Performance, up to Q3 2020 (2/2) Gross written premium –Top line a) Non-life GWP: UShs 524.85bn (84.55% of 2019, UShs 620.72bn). b) Life GWP: UShs.237.58bn (85.98% of 2019, UShs 276.32bn) c) HMO GWP: UShs. 55.90bn (73.45% of 2019, UShs 76.11bn) d) Life +Non-life + HMO Industry GWP: UShs 818.72bn (84.02% of 2019, UShs 974.42bn)

9 DRIVING GROWTH [email protected] Distribution of Gross written premium income as at Q3, 2020

0.05% 6.83%

29.02% 64.11%

Non-life Life HMOs Micro Insurer

10 DRIVING GROWTH [email protected] Company-wise performance – Non Life (UShs 000) No Company Gross Premium Re-insurance Net Premium 1 Jubilee 136,515,768 85,818,655 50,697,113 2 UAP General 109,023,738 35,783,114 73,240,624 3 Sanlam General 61,665,506 21,728,290 39,937,216 4 Britam 51,746,103 21,183,763 30,562,340 5 ICEA General 20,936,170 10,895,192 10,040,978 6 Goldstar 19,966,125 10,997,828 8,968,297 7 MUA Insurance 16,334,053 8,173,313 8,160,740 8 APA 13,772,155 4,957,222 8,814,933 9 Liberty General 12,894,920 5,427,232 7,467,688 10 CIC General 12,458,316 6,019,212 6,439,104 11 NIC General 12,306,222 4,485,202 7,821,021 12 Swico 12,269,492 1,485,545 10,783,947 13 Alliance 9,507,467 3,622,251 5,885,216 14 Mayfair 8,411,369 4,545,091 3,866,277 15 TransAfrica 7,093,893 3,854,397 3,239,496 16 Excel 6,591,077 1,552,955 5,038,123 17 PAX 3,838,315 743,127 3,095,188 18 FICO 3,804,677 1,257,475 2,547,202 19 GA Insurance 3,096,505 1,708,401 1,388,104 20 AIG 1,625,376 1,271,988 353,388 21 Rio 999,582 112,690 886,892 Total 524,856,829 235,622,941 289,233,88811 Company-wise comparison of Non-life GWP as at Q3, 2020 ( Ushs. ‘000’)

160000000

140000000

120000000

100000000

80000000

60000000

40000000

20000000

0

12 DRIVING GROWTH [email protected] Key observations from the graph a) 2 companies above UShs 100bn in GWP (Very good performance) b) 2 companies between UShs 50bn & 100bn c) 8 companies between UShs10bn & 50bn d) 8 companies between UShs1bn & 10bn e) 1 company below UShs 1bn (Need to review its market strategies)

13 DRIVING GROWTH [email protected] Company-wise performance – Life (Ushs. 000)

No Company Gross premium Reinsurance Net premium

1 Jubilee 44,430,092 1,134,916 43,295,176

2 ICEA 42,851,266 2,398,970 40,452,296

3 Prudential 41,067,074 3,600,268 37,466,806

4 UAP Life 39,523,479 1,285,677 38,237,802

5 Liberty 30,517,672 10,406,070 20,111,602

6 Sanlam 25,347,254 5,377,109 19,970,145

7 Metropolitan Life 6,641,528 - 6,641,528 8 CIC Life 6,236,888 1,112,748 5,124,140

9 NIC Life 974,654 115,755 858,899

TOTAL 237,589,908 25,431,513 212,158,394

14 DRIVING GROWTH [email protected] Company-wise comparison of Life GWP as at Q3, 2020( Ushs. ‘000’)

50000000

45000000

40000000

35000000

30000000

25000000

20000000

15000000

10000000

5000000

0

15 DRIVING GROWTH [email protected] Key observations from the graph a) 5 companies above 30bn in GWP (Good performance) b) 1 company between UShs 20bn to 30bn c) 2 companies between UShs 5bn to 10bn d) 1 company below UShs 1bn (Needs to review its strategies)

16 DRIVING GROWTH [email protected] Company-wise performance – HMOs (Ushs. 000)

Premiums No Company Gross premium ceded Net premium

1 AAR Health Services (U) Limited 25,089,888 6,390,871 18,699,017

2 International Air Ambulance 23,723,715 39,808 23,683,907

3 Case Med Care Limited 3,361,236 - 3,361,236

4 International Medical Link (U)Ltd 2,460,365 - 2,460,365

5 St. Catherine's Hospital 1,266,088 - 1,266,088

Total 55,901,292 6,430,679 49,470,613 17 DRIVING GROWTH [email protected] Company-wise comparison of HMO GWP as at Q3, 2020( Ushs. ‘000’) 30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0 AAR Health Services (U) International Air Case Med Care Limited International Medical St. Catherine's Hospital Limited Ambulance Link (U)Ltd

18 DRIVING GROWTH [email protected] Key observations from the graph a) 2 Companies above 20bn. in GWP b) 3 Companies between 1 and 3.5bn. c) No company below UShs 1bn.

19 DRIVING GROWTH [email protected] Micro-insurers performance as at Q3, 2020 (Ushs. ‘000) Description Grand Micro (‘000’ Edge (‘000’ shs) shs) Gross premium 372,954 1,000

Premiums ceded 35,234 -

Net premium 337,721 1,000

Net earned premium 192,094 1,000

Total claims( paid and 44,700 - outstanding) commission paid - - management expenses 339,959 38,063

Loss Ratio 23.27% - 20 DRIVING GROWTH [email protected] Bancassurance Performance life Insurance business Q3 2020

No Company Gross Premium Commission received 1 Stanbic Bank 9,185,158,344 1,798,347,351 2 ABSA 8,614,393,436 1,588,414,294 3 6,508,976,307 696,384,893 4 Standard Chartered Bank 2,973,709,894 621,516,373 5 2,043,406,129 313,197,235 6 DFCU 1,969,776,037 284,465,138 7 Post Bank 1,509,575,209 205,618,293 8 Eco Bank 697,663,511 175,398,520 9 United Bank of Africa 532,171,447 98,462,801 10 456,065,657 82,773,010 11 Diamond Trust Bank 406,594,113 79,856,324 12 598,731,771 76,275,395 13 Opportunity Bank 391,988,025 64,184,142 14 298,950,100 53,768,392 15 Finance Trust 200,028,069 38,768,193 16 Bank of Africa 163,127,271 31,251,127 17 KCB Bank 149,476,979 16,972,353 18 Mercantile Credit Bank 32,449,299 2,966,354 19 NCBA Bank 10,890,957 1,454,957 20 ABC Capital Bank - -

Total 36,743,132,555 6,230,075,14421 DRIVING GROWTH [email protected] Bancassurance Performance Non-Life Insurance business Q3 2020

No Company Gross Premium Commission received 1 Stanbic Bank 4,331,064,865 541,273,655 2 Housing Finance Bank 1,359,694,669 206,847,442 3 Post Bank Uganda 1,653,621,508 182,422,917 4 Centenary Bank 849,479,032 158,520,171 5 KCB Bank 1,184,169,796 128,028,953 6 DFCU 984,075,226 113,494,768 7 Exim Bank 730,965,537 109,228,749 8 Orient Bank 656,551,502 88,019,728 9 Tropical Bank 533,454,809 78,925,052 10 Finance Trust 382,797,236 65,539,522 11 Mercantile Credit Bank 527,841,993 64,285,428 12 NCBA 490,141,921 55,515,749 13 ABSA 545,638,387 38,879,562 14 Bank of Africa 247,011,745 38,879,562 15 Diamond Trust Bank 221,319,525 35,807,245 16 Opportunity Bank 319,264,753 31,863,990 17 Standard Chartered Bank 105,955,207 15,890,468 18 United Bank of Africa 90,282,461 14,638,948 19 ABC capital bank 34,803,379 9,976,251 20 Eco Bank 49,236,971 8,202,672 Total [email protected] 15,297,370,522 1,986,240,83222 Bancassurance Performance Life and Non-life Insurance Q3 2020 Observations I. Total Gross Premium Written through Bancassurance Agents amounted to UShs 52,040,503,077 as at the end of Q3 2020 (6.36% of Q3 2020 industry GWP of 818,721,983,211) II. Gross Commission received UShs 8,216,315,976 at the end of Q3 2020 compared to UShs 6,538,402,075 over the same period in 2019 (25.6% growth) III. We continue to pledge our commitment in providing the required support to nurture this very promising distribution channel.

NB: Majority of the Brokers and Loss Assessors didn’t submit and action is to be taken against them for non-compliance

23 DRIVING GROWTH [email protected] Highlights of Market Development and Achievements (1) Agenda set out for Achievements to-date 2020 1. Finalization of A compendium of Insurance Regulations, 2020, containing: Insurance - The Insurance (fees) Regulations Regulations - The Insurance (Mobile Insurance) Regulations - The Insurance (Reinsurance Regulations - The Insurance (Capital Adequacy and Prudential Requirements) Regulations - The Insurance (Insurance Training College) Regulations - The Insurance (Licensing and Governance) Regulations

2. Acquisition of a The Procurement process initiated, and is ongoing Regulatory reporting software

24 [email protected] DRIVING GROWTH Highlights of Market Development and Achievements (2) Agenda set out for Achievements to-date 2020 3. Enhancing - We undertook trainings of Senior Management of all internal as well as Companies on the Requirements for RBS Industry capacity to - A stress testing model was developed and trainings on the effectively adapt to same undertaken for the industry. RBS

4. Joint inspections These were not undertaken because of the constraints with Ministry of imposed by Covid-19. Gender, Labour and Social Dev’t on enforcement of workers compensation

25 DRIVING GROWTH [email protected] Highlights of Market Development and Achievements (3) Agenda set out for Achievements to-date 2020 5. Research into Three studies were undertaken over the period, and reports consumer and published on our website: related market - Impact of Covid 19 on the Insurance Sector conduct issues - Status of Motor Vehicle Insurance in Uganda - The landscape and potential for expansion of insurance distribution options in Uganda

6. Perpetual This was effected at the start of 2020 as per the provisions of licensing of Players the law. The Authority is currently undertaking compliance checks for players to enable a decision on their continuous operations in 2021.

7. Online Motor - The platform was launched and effective 1st July 2020, it Third Party became compulsory. Sales in excess of UShs 8.8Bn have payment platform been made through the platform (>116,000 policies) - Signed MOU with Ministry of Works on enforcement26 DRIVING GROWTH [email protected] Highlights of Market Development and Achievements (4) Agenda set out for Achievements to-date 2020 8. Undertake The recruitment process is on-going to enhance the capacity recruitment of more of the Authority to more effectively deliver its mandate. staff at IRA.

9. Development of The draft is in place, and now at the Authority’s Board level. Uganda’s Insurance Policy.

10. Strengthening - We have adopted virtual options to manage the the complaints Complaints Bureau in light of Covid 19. Bureau to enhance - We are finalising dev’t of a Complaints Management complaints redress System to improve on efficiency of service delivery.

27 DRIVING GROWTH [email protected] Highlights of Market Development and Achievements (5) Agenda set out for Achievements to-date 2020 11. Promotion of - We have organized an innovation awards event for innovation 2020 to reward innovation and excellence. Deadline for submission of proposals is 30th November 2020. - We have issued Regulatory Sandbox guidelines to provide a framework for the budding innovators to innovate in the insurance space.

12. Promotion of Undertook various Insurance Awareness Activities, now Consumer on virtual platforms, to comply with the Restrictions on Education gatherings.

13. IFRS 17 Dev’t process is ongoing; stakeholder consultation guidelines to be organised for Monday 30th, Nov. 2020. developed 28 DRIVING GROWTH [email protected] Highlights of Market Development and Achievements (6) Agenda set out for Achievements to-date 2020 12. Implement local - Facilitating frameworks developed and signed off. marine cargo/G.I.T - Systems development Complete and integration in insurance advanced stages. - Launch expected within the Quarter ending March 2021.

13. Development of These are in the final stages of development Oil and gas insurance regulations

14. Set up and The Regulations were gazetted, awaiting to be laid before operationalization parliament of the Insurance Appeals Tribunal

29 DRIVING GROWTH [email protected] Highlights of Market Development and Achievements (7) Agenda set out for 2020 Achievements to-date 15. Conclude the Transfer This was concluded and Uganda Re is now fully in charge. of COMESA Yellow Card assets and liabilities to Uganda Re.

16. Completion of IRA Progress was slowed down by the Pandemic, but recovery building project (Phase 1) measures have been put in place. We plan to move to our – The Insurance Towers at new location by mid, next year. Plot 6 Lumumba Avenue

17. Promote market Dev’t - The Authority in collaboration with the Ministry of Health, carried out an Interim Actuarial Study to inform the contribution rates and proposed operation mechanism for the NHIS. - The Authority signed several MOUs aimed at promoting market Dev’t – URA, Min. of Works, FSDU 30 DRIVING GROWTH [email protected] Challenges

31 DRIVING GROWTH [email protected] Challenges (1) a) Covid 19 and its effects on production and productivity b) Slow growth of the economy occasioned by low disposable income c) Consumer Awareness deficit d) Increased cases of insurance fraud e) Market conduct issues (Undercutting; claims settlement…..) f) Slow pace of Oil and Gas exploration

32 DRIVING GROWTH [email protected] Challenges (2) g) Getting government to insure its key assets and properties h) Challenges associated with enforcement of Workers Compensation Insurance and MTP (liability) insurance

[email protected] 33 DRIVING GROWTH Agenda for 2021

34 DRIVING GROWTH [email protected] Agenda for 2021: our efforts shall be focused on……….(1) a) Operationalization of the Insurance Act (implementation of the Regulations) b) Finalization of the pending Regulations c) Finalization of the new Motor Vehicle Insurance law d) Implementation of IFRS 17 e) Finalizing and utilizing the Mortality tables f) Automating our supervisory operations through acquisition and deployment of the Supervisory and Reporting software g) Implementation of new regulations i.e. CG requirements, supervising DAP schemes h) Operationalizing the Appeals Tribunal i) Implementation of Marine and GIT compulsory insurance j) Continuation with implementation of Risk Based supervision and Monitoring Capital Adequacy Ratio (CAR) of insurance companies k) Enforcement of MTP through strategic engagements with Uganda Police and Ministry of Works (with whom we already have working memoranda)

[email protected] 35 DRIVING GROWTH Agenda for 2021: our efforts shall be focused on……….(2) l) Shifting to our new home at Lumumba Avenue. m) Support market development initiatives – Research and Innovation. n) Engagement with MDAs on insurance of their strategic assets. o) Engagements with Development Partners to support the Insurance Sector. p) Engagement with Government on the NHIS

[email protected] 36 DRIVING GROWTH Conclusion The year 2020 has been and will be a year to remember because of the Covid 19 Some milestones were registered when Insurance was recognized as an essential service From the statistics, there is evidence of decelerated growth, but what stands out (and we need to celebrate perhaps) is that the sector remained very resilient – registering growth of 9.35% (over Q3 of 2019). Nevertheless, times have changed and business models have to change for sustainable growth. Individuals and businesses are constrained liquidity wise and are looking out for risk-management solutions as opposed to mere insurance policies.

37 DRIVING GROWTH [email protected] Conclusion

Thus, as you move into 2021, my package to you is:

“NEVER LOSE HOPE. STORMS MAKE PEOPLE STRONGER AND NEVER LAST FOREVER.” - Martin Luther King Jr.

Things may not get easier! What we have to do is to get stronger and more resilient. And yes, we can.

38 DRIVING GROWTH [email protected] 39 DRIVING GROWTH [email protected]