NPA boss Muvawala: Uganda’s insurers must reinvent themselves beyond paying claims

KAMPALA. Uganda’s insurance industry is being challenged to move beyond paying claims and play a bigger role in mobilising long-term capital and protecting investments as the government pursues its ambition of growing the economy tenfold.

The industry currently generates about Shs2.02 trillion in gross written premiums annually and has been growing by between 10 and 12 per cent, but the National Planning Authority (NPA) says its contribution remains small relative to the size of the economy.

NPA Executive Director Joseph Muvawala said the sector must position itself to support investment in agriculture, tourism, mining, oil and gas, and science, technology and innovation, which government has identified as key drivers of economic growth.

“Insurance is not a service that becomes relevant after growth has occurred. It is part of the institutional
architecture that makes growth possible. When major risks cannot be identified, priced, pooled and transferred, lenders restrict credit, investors
postpone commitments, firms hold back expansion and households avoid productive activity. The depth of the insurance market consequently affects the depth of investment in the wider economy,” he said.

Dr Muvawala was speaking to chief executives of insurance companies in Kampala on Wednesday during an engagement on opportunities for the sector under the Tenfold Growth Strategy.

He said insurance companies should be involved in major investments from the planning stage rather than waiting until projects are completed or losses occur before offering cover.

“If you notice how the economy is developing, insurance has to be at the centre. We need to see how insurance can be developed to support these investments,” Mr Muvawala said.

“In 2025, gross written premiums reached UGX 2.02 trillion, while
gross claims paid amounted to UGX 778.9 billion. That is evidence of a
functioning and expanding industry. But we must place UGX 2.02 trillion
against the size of the economy, the value of national assets and the volume
of investment Uganda intends to undertake

He said government intends to introduce incentives to encourage insurers to play a greater role in financing and de-risking investments.

The opportunity is particularly significant given the scale of projects identified under the Fourth National Development Plan (NDP4).

NDP4 identifies agriculture, tourism, mineral-based industrial development, including oil and gas, and science, technology and innovation as priority growth areas. Its Projects Investment Plan contains 803 high-impact projects which Mr Muvawala said could provide a large market for insurance products.

“Because in everything we do, there is a risk element. Insurance therefore becomes critical to us,” he said.

The NPA executive director said insurers could also help unlock financing by providing protection against risks that discourage banks and other investors from financing businesses and projects.

He cited the Agriculture Credit Facility and Uganda Agriculture Insurance Scheme as examples of government programmes designed to reduce risks and expand access to finance for farmers.

Mr Muvawala acknowledged complaints over inadequate financing under the programmes and said government would consider increasing resources available to them.

“I know many farmers are complaining. We need to look at whether we can increase the resources,” he said.

The Insurance Regulatory Authority (IRA) Acting Chief Executive Officer, Mr Protazio Sande, said the sector’s contribution remains low and needs to expand if insurance is to support Uganda’s ambition of building a $500 billion economy.

He attributed recent growth partly to innovations in insurance products, marketing and improvements in claims settlement, which he said have helped improve public confidence in the industry.

However, Mr Sande said low uptake of insurance remains a major challenge, particularly for life insurance.

He said life insurance is important to the economy because it can mobilise long-term savings and capital, unlike most non-life insurance products, which are generally shorter term.

“Because for most of the investments that we are talking about, we need long-term capital. Insurance can be part of that coordinated development agenda,” Mr Sande said.

He also called for government to insure more of its assets, saying this could significantly expand the insurance market because the state is one of Uganda’s largest investors and asset owners.

Greater government participation, he said, would create additional business for insurers while ensuring that public assets are protected against losses.

The call comes as government seeks to mobilise more private capital for its development agenda while reducing investment risks in sectors expected to drive economic growth.

Mr Muvawala said the NPA will prepare a paper outlining possible measures to support the insurance industry and facilitate discussions between insurers and the Ministry of Finance, Planning and Economic Development.

The discussions are expected to examine incentives and other policy measures that could increase insurers’ participation in financing and de-risking investments.

For the insurance industry, the challenge is therefore not only to increase premium collections but also to expand its role as a source of long-term capital and a risk-management partner for businesses and government projects.