To create an enabling regulatory environment for sustainable growth of the insurance industry while upholding the international best practices.

Transcription

1 2016

2 To create an enabling regulatory environment for sustainable growth of the insurance industry while upholding the international best practices.

3 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 i STRATEGIC OVERVIEW OF IRA Our Business Who we Are We are the Insurance Regulatory Authority of Uganda whose establishment was a consequence of Government s adoption of the Liberalization policy which ended its role of directly engaging in the provision of goods and services and taking on the role of Supervision and Regulation. The Authority is the Supervisor and Regulator of the insurance industry in Uganda. It was established under the Insurance Act, (Cap 213) Laws of Uganda, 2000 (as amended) with the main objective of ensuring Effective Administration, Supervision, Regulation and Control of the business of insurance in Uganda. In addition to maintaining the safety and sound operation of insurance players, protecting the interests of insureds and insurance beneficiaries and ensuring the supply of high quality and transparent insurance services and products, the Authority commits significant efforts and resources to facilitating the development of the insurance market. Our Mission To create an enabling regulatory environment for sustainable growth of the insurance industry while upholding the international best practices. Our Vision A Vibrant and Secure insurance industry Our Values The Insurance Regulatory Authority has five core values, namely: I) Professionalism - We are qualified, skilled and act with the highest standards of excellence. II) Integrity - We model ethical behaviour by conducting all matters of business with integrity. III) Accountability - We accept responsibility for our actions. IV) Team Work We are better together. V) Transparency We are open and honest in communication

4 ii Insurance Regulatory Authority of Uganda BOARD MEMBERS Our Board is comprised of a team of passionate experts leading the corporate strategy by inspiring example. They include: Dr. Isaac Nkote Nabeta Board Chairman Dr. Charles A Abuka Member Hajjat. Aphwa K. Ssebyala Deputy Board Chairperson Mr. James Muwawu Member Alhaj Kaddunabi Ibrahim Lubega Chief Executive Officer Mr. Ssegawa Ronald Member

5 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 iii TOP MANAGEMENT Our Management team is true to our vision, mission and values whilst putting policyholders safety at the centre of our regulatory mandate. The team includes: Alhaj Kaddunabbi Ibrahim Lubega The Chief Executive Officer Mrs.Evelyn Nkalubo-Muwemba Director Legal & Compliance Mrs. Florence Nviri Kawuma Director Finance Mr. George Steven Okotha Director of Operations

6 iv Insurance Regulatory Authority of Uganda BOARD CHAIRMAN S STATEMENT...Insurance in Uganda has come a long away and in as much as it is still far from the desired level, many milestones have been registered over the years... On behalf of the Board of the Insurance Regulatory Authority of Uganda and indeed on my own behalf, I am delighted to make my maiden statement in this 2016 edition of the Annual Market Report as Chairman of the Board. Insurance in Uganda has come a long away and in as much as it is still far from the desired level, many milestones have been registered over the years. For instance, the market has well capitalised players operating in a well regulated environment and serving relatively well informed clients. These achievements are attributed to the concerted efforts and stewardship that have over the years been offered by the gallant men and women who have steered the Authority before us. On this note, I would like to salute the leadership and the entire membership of the Board from whom the current Board took over. As chairman, I will lead my colleagues to build onto the milestones registered by our predecessors and surely, where necessary, adjustments will be made to accommodate the changing circumstances that are characteristic of a modern insurance world. I make my first statement in a year when the insurance industry in Uganda, and indeed the whole economy, is not at its best was a year when banks charged as high as 25% interest rate on loans to match the increasing costs resulting into a rise in non-performing loans as many borrowers failed to repay the loans. As such, banks became risk averse and slowed down on lending resulting into a reduction in Private sector credit growth from an average of 19% in 2015 down to just 7.5% in The impact of this was felt throughout the economy. This, coupled with other factors such as the difficult regional environment, the uncertain global economy and the unusually long dry spells across the country, among other factors, greatly affected economic activity. Insurance was no exception and indeed the growth rate in aggregate Gross Written premiums was less than 4% compared to 21.68% growth in However, signs of improvements are emerging and as we move into 2017, I am motivated by the fact that the macroeconomics are improving and the outlook for 2017/18 is broadly favourable. With steadfast policy implementation and favourable weather conditions forecasts, the International Monetary Fund estimates economic growth to accelerate to 5 percent in FY17/18. Over the medium term, infrastructure and oil sector investments could yield growth rates of 6% to 6.5% as core inflation is projected to stay close to the 5 percent target. I am also encouraged by signs of global economic recovery. Given the above improvements, I remain very optimistic that 2017 will be a better year for the sector. Infact, my optimism is supported by the results of the 2017 first Quarter which show a 34% increment in business volume when compared with the same period in Further, the government of Uganda announced the budget for the 2017/2018 fiscal year with approximately a third of the total planned expenditure estimated at USD 8.1 billion earmarked for infrastructure development. The insurance sector will have to strengthen their internal systems, harness their capabilities, leverage on technologies, adhere to the regulatory guidance and improve their value propositions so as to fully exploit the opportunities presented by the improving environment.

7 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 v As Board, we shall remain focused on our most fundamental role - protection of the public interest through providing strategic guidance and support to the Authority to address the critical issue of insurance penetration with renewed commitment, synergy and relevance to cope with the changing environment. On behalf of my colleagues, and indeed on my own behalf, I appreciate the confidence and trust the Minister of Finance, Planning and Economic Development placed in us by giving us an opportunity to provide strategic direction and guidance to the Insurance Regulatory Authority of Uganda. I know that it is not a simple assignment but with my colleagues, we are surely pleased and ready to make a contribution to this important sector. Last, but certainly not least, I express my gratitude for the steadfast efforts of the Authority s management and staff for their hard work and commitment to the vision of creating an enabling regulatory environment for sustainable growth of the insurance industry while upholding the international best practices. The players are equally appreciated for the resilience in the wake of a difficult business environment. In a dynamic business landscape like ours, averages can no longer work. It is only with each one of us doing our best that the future of insurance industry in Uganda will be guaranteed. Dr. Isaac Nkote Nabeta CHAIRMAN

8 vi Insurance Regulatory Authority of Uganda CHIEF EXECUTIVE OFFICER S STATEMENT...Amidst the difficult landscape, I want to affirm that the insurance industry has remained solid and solvent. As you will be noticing in the statistics, only one company had a solvency gap that has since been bridged... It is yet another time of the year when we present an account of the yearly business and activity that characterised the insurance market. On the onset, I want to point out that 2016 was not an easy year owing to the difficult operating landscape, both internal and external, that curtailed business activity generally, insurance activity inclusive. This notwithstanding however, there was still some positive growth of 3.6% in overall Gross Written Premium with a significant portion of this growth emanating from the life assurance segment. Amidst the difficult landscape, I want to affirm that the insurance industry has remained solid and solvent. As you will be noticing in the statistics, only one company had a solvency gap that has since been bridged. The Boards and Management of different players have severally been engaged to ensure that stability of their respective companies is a going concern. The obligation is further enhanced by the governance requirements embedded within the risk based supervisory regime which we have adopted in a phased manner. Otherwise, in the year 2016, the Gross Written Premium by the insurance industry increased from UShs 612 billion in 2015 to UShs 635 billion in 2016 representing 3.6% growth. This growth, as already noted was a record low in a period of over a decade owing to a combination of factors that I will divulge into Later. Non-life insurance business continued to dominate the industry in terms of premiums underwritten with 70.9% down from 75.99% in Life insurance business on the other hand accounted for 20.87% up from 16.34% in Despite the dominance of the Non-life segment, the Life Insurance segment continued to grow relatively much faster at 32.7% in 2016 compared to Non-life and HMOs which grew by -3.06% and 8.25% respectively. The phenomenal growth in the life segment despite the difficult economic times is attributed to the effective separation of the hitherto composite companies, product innovation, aggressive marketing by individual companies and offer of attractive bonuses, among others. In addition, insurance customer servicing in this segment has greatly improved as some companies have started issuing quarterly statements and declaring annual bonuses. The relative importance of this segment is expected to grow even higher in the medium to long term as the country heads for a middle income status envisaged in the National Development Plan II and the Uganda Vision The decline in the non-life insurance premiums on the other hand was due to among other things the impact of uncertainties, resulting from the elections, on the economy in the first half of 2016, the subdued growth of Uganda s economy arising from the slow growth in Uganda s major trading export partners (Europe, China, and S. Sudan); significant reduction in remittances by Ugandans living abroad due to the global economy facing turbulence; increasingly stringent conditions for borrowing occasioned by worsening quality of loans reduced private sector credit; and slowed implementation momentum of public infrastructure projects. As earlier noted however, despite the above, the sector remained financially solid and true to the promises that underlie the insurance business. The gross claims paid for both life and Non-life insurance (including HMOs) in the reporting period increased from UShs 214 billion in 2015 to UShs 260billion in 2016 representing a 21.5% growth in claims paid out. This is a testament of

9 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 vii the fundamentals that the true essence of insurance is in how able and well payable claims are settled. Financially, the Insurers (including HMOs) Net Asset base also increased from UShs 373 billion in 2015 to UShs 407 billion in 2016, representing a growth of 9.3%. The sustained growth of the insurers asset base highlights the growing strength of companies to handle insurable risks locally and provide adequate protection to the insuring public. The details of these performances are in the detailed statistics in this report. As I end my statement, I am confident that 2017 is a year to look forward to. World Bank projections put the rate of growth for the Ugandan economy at 5.9% in FY 2016/17 as short-term domestic uncertainties recede and with a supportive Macro Economy, relatively better progress is expected in In addition, the Government s pronouncement on Marine insurance in the FY 2017/18, requiring locally licensed insurance companies to issue all policies relating to domestic marine cargo insurance; introduction of Bancassurance as a new distribution channel; enhanced enforcement of compulsory insurance such as the Workers Compensation Insurance cover; the legislative changes introduced by the Insurance Act, 2017; provisions for public infrastructure developments in the Government budget for FY 2017/18; technological innovations in products distribution, among others are all expected to drive insurance business growth. Insurers are challenged to adjust their assumptions, systems and business models to benefit from these opportunities. I want to also applaud the 6th Board of the Authority whose term expired in January 2017 for providing the requisite oversight and stewardship to Management over the years, including the period under review. I once again thank the Minister for appointing a new Board under the Chairmanship of Dr. Nkote Isaac Nabeta. I am very optimistic that the Authority shall greatly benefit from the vast skills and experience of a very strong and dynamic Board. I want to appreciate my colleagues in management and the entire staff for their commitment to the Authority s Vision. I pledge to continue contributing leadership, enthusiasm, and dependability to the effort. Alhaj Kaddunabbi Ibrahim Lubega CHIEF EXECUTIVE OFFICER Finally, I want to acknowledge with thanks the Minister of Finance, Planning and Economic Development, on behalf of the Government of Uganda, for entrusting me with the noble responsibility of leading the Management of the Insurance Regulatory Authority of Uganda.

10 viii Insurance Regulatory Authority of Uganda THE YEAR 2016 IN BRIEF Non - Life GWP LIFE GWP 450bn 132bn Total NonLife GWP in 2016 was UGX. 450 bn (2015: 464 bn) 3% Total Life GWP in 2016 was UGX. 132 bn (2015: 99.8 bn) 32.7% HMOS GWP 52bn Total HMOs GWP in 2016 was UGX. 52 bn (2015: 46.9 bn) 11% TOTAL INDUSTRY GWP 634bn Total Life GWP in 2016 was UGX. 634 bn (2015: 612.1bn) 3.7% GROSS CLAIMS PAID 260bn Gross claims paid in 2016 was UGX. 260bn (2015: 214 bn) 21.5% PREMIUM THROUGH BROKERS 208bn Premium through brokers in 2016 was UGX. 208 bn (2015: 245.3bn) 14.8% NON-LIFE NET ASSETS LIFE NET ASSETS 324bn 80bn Non-Life net assets in 2016 was UGX. 324 bn (2015: 317 bn) 2.1% Life net assets in 2016 was UGX. 80 bn (2015: 53bn) 51.8%

11 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 ix INDUSTRY STATISTICAL PERSPECTIVE The Insurance Industry has experienced rapid growth overtime as shown in the table below: Total Industry Gross Written Premium (UShs. Billions) Industry Growth rates 18.66% 31.53% 9.03% 21.26% 3.71% Non-life Gross Premium (UShs. Billions) Non-life Growth rates 19.34% 12.27% 9.28% 20.94% -3.08% Life Gross Premium (UShs. Billions) Life growth rates 13.50% 42.05% 33.57% 34.86% 32.77% HMOs Gross Premium (UShs Billions) HMO growth rates % 0.21% 11.09% GDP at market prices (Ushs Billions) 61,373 66,764 72,660 81,688 86,555 GDP growth rates 3.2% 4.7% 4.6% 5.7% 2.3% INSURANCE PENETRATION (%) INSURANCE DENSITY ($)

12 x Insurance Regulatory Authority of Uganda Market Share based on GWP for Non-Life Insurance Companies in 2016 No Name of the Company 2016 Gross written premium 2015 Gross written premium %age growth Market Share 2016(%) 1 Jubilee Insurance Company 114,863,979, ,828,599, % 25.51% 2 UAP General Insurance Company 81,803,518, ,502,568, % 18.17% 3 AIG Uganda Ltd 31,941,225,000 41,038,645, % 7.10% 4 Lion Assurance Company 29,110,990,000 35,202,199, % 6.47% 5 Goldstar Insurance Company 22,729,381,847 26,894,257, % 5.05% 6 Britam Insurance Company 30,512,918,000 25,649,927, % 6.78% 7 ICEA General Insurance Company 20,070,157,000 20,835,734, % 4.46% 8 APA Insurance (U) Ltd 13,224,909,000 15,037,136, % 2.94%

13 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 xi No Name of the Company 2016 Gross written premium 2015 Gross written premium %age growth Market Share 2016(%) 9 Phoenix of Uganda Ltd 14,628,541,000 14,503,619, % 3.25% 10 Statewide Insurance Company 13,203,209,826 12,027,171, % 2.93% 11 Excel Insurance Company 8,404,572,595 10,802,539, % 1.87% 12 East African Underwriters 11,023,539,000 10,398,676, % 2.45% 13 NIC General 12,832,629,000 10,372,676, % 2.85% 14 Sanlam General Insurance Ltd 17,329,099,000 9,334,110, % 3.85% 15 Transafica Assurance Co Ltd 8,703,818,472 9,242,149, % 1.93% 16 Pax Insurance Company 4,302,644,000 4,028,174, % 0.96% 17 Alliance Africa General Ins Ltd 6,237,929,000 3,649,578, % 1.39% 18 First Insurance Company Ltd 3,794,542,000 2,882,323, % 0.84% 19 Nova Insurance Company 1,324,817,000 1,121,443, % 0.29% 20 CIC General 3,016,674, ,782, % 0.67% 21 Rio Insurance Company 1,123,846, ,673, % 0.25% Total 450,182,938, ,426,979, % % Market Share based on GWP for Life Insurance Companies in 2016 No Name of the Company 2016 Gross written premium 2015 Gross written premium Percentage Change(%) Market Share 2015(%) 1 Liberty Life Assurance Ltd 39,317,249,000 35,051,898, % 29.67% 2 UAP Life Assurance Co 30,203,538,000 18,776,447, % 22.80% 3 ICEA Life Assurance Company 22,968,033,000 17,992,196, % 17.33% 4 Sanlam Life Insurance (U) Ltd 21,266,940,000 15,682,953, % 16.05% 5 Jubilee life Insurance 14,697,148,000 9,855,483, % 11.09% 6 NIC Life 1,454,575,000 2,039,594, % 1.10% 7 Prudential Assurance Uganda Ltd 2,196,491, ,730, % 1.66% 8 CIC Life 395,757,000 61,840, % 0.30% Total 132,499,731,000 99,852,141, % %

14 xii Insurance Regulatory Authority of Uganda Market Share based on GWP for HMOs in 2016 No Name of the Company 2016 Gross written premium 2015 Gross written premium %age growth Market Share 2016(%) 1 AAR Health Services 22,586,147,000 20,452,139, % 43.30% 2 International Air Ambulance 24,161,189,000 18,802,087, % 46.32% 3 Case Medical care 2,840,575,000 3,081,855, % 5.45% 4 Kadic Health Foundation - 2,177,596, % 0.00% 5 International Health Network - 1,332,257, % 0.00% 6 International Medical Link 1,845,339, ,879, % 3.54% 7 St Catherine Clinic 726,019, ,596, % 1.39% 8 Lisa Medical Centre - 385,000, % 0.00% 9 Nakasero Healthcare - 311,705, % 0.00% 10 Intergrated Community Based Initiative - 211,166, % 0.00% Total 52,159,269,966 48,183,282, % % NB: - Indicates that the company did not operate

15 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 xiii ACRONYMS DAP: EAC: GDP: HMO: IAIS: ICPs: IFRS IAS: IBNR: LIFE INDIV: MARINE/AV: MISC. ACCIDENT: MTPL: UAIB: UIA: USHS: IIU Deposit Administration Plan East African Community Gross Domestic Product Health Management Organisations International Association of Insurance Supervisors Insurance Core Principles International Financial Reporting Standards International Accounting Standards Incurred But Not Reported Life Individual Marine/Aviation Miscellaneous Accident Motor Third Party Liability Insurance Uganda Association of Insurance Brokers Uganda Insurers Association Uganda Shillings Insurance Institute of Uganda

16 xiv Insurance Regulatory Authority of Uganda GLOSSARY OF INSURANCE TERMS TERM Cession rate: Claim: Loss/Claims ratio: Claims settling agent: Cover: Earned premium: Expense ratio: Facultative reinsurance: Foreign company: Gross premium income: Incurred claims/losses: Insurance: Insurance Act: Insurance Density: Insurance Penetration: Insured: Licence: Net premium income: Policy: Policyholder: Premium: Reinsurance: MEANING proportion of premium ceded (to reinsurers) to the total gross premium. demand by the insured for an indemnity or benefit under the policy. claims (losses) incurred as a percentage of the premium earned. person licensed under the Insurance Act to undertake the business of settling or negotiating settlement of insurance claims under policies issued by insurers whether within or outside Uganda. insurance provided by the insurer for the insured or reinsurer for the reinsured. portion of the gross premium relating to the period of insurance that has already run. proportion of the amount of expenses to the amount of premiums incurred in connection with a particular class of business. reinsurance of an individual risk on terms and conditions agreed with the reinsurer specifically for that risk. company registered or incorporated under the Companies Act in which the majority of shares and actual controlling interest are held by non citizens of Uganda. total premium before deducting outgoing reinsurance premium. total of paid and outstanding claims arising in a given period. mechanism whereby the risk of financial loss is transferred from an individual, company, organization or other entity to an insurance company. Insurance Act, (Cap 213) Laws of Uganda, 2000, as amended by the Insurance Amendment Act, 13, of premium amount per capita. gross premium as a percentage of the GDP. party who has acquired the insurance and will be entitled to enforce a claim under the policy as a party to the contract. licence issued under the Insurance Act and prescribed in the Insurance Regulations, gross premium income less reinsurance premiums. document evidencing the contract between the insurer and the insured. person in whose name the policy is issued. consideration paid/payable by the insured in return for the insurance cover provided by the insurer. transfer of whole or part of a risk from one insurer to another, usually larger insurer known as a reinsurer.

17 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 xv Reinsurance premium: Retention: Retention ratio: Risk manager: Third Party: amount paid by an insurer in consideration of reinsurance. proportion of the amount of the risk that an insurer retains on his own account. proportion of net premiums to gross premiums. person who does the business with regard to minimising losses arising through unforeseen events and of minimising the cost of such losses by arranging physical or financial measures through insurance or any other means. anyone else who is involved in a loss event, which may or may not result in a claim. For example, in motor insurance a third party may be another vehicle owner, property owner, or persons such as passengers or pedestrians.

18 xvi Insurance Regulatory Authority of Uganda KEY INSURANCE INDUSTRY FACTS Motor Third Party Liability and Workers Compensation are compulsory insurance covers in Uganda. Motor Third Party Liability Limits 1 million shillings per person per accident 10 million aggregate liability per accident The maximum compensation under Workers Compensation insurance is 60 times an employee s monthly earnings. Minimum paid-up capital requirements. Reinsurance company-ushs10 billion. Non-life insurance company- Ushs 4 billion Life insurance company Ushs 3 billion Insurance/reinsurance broker - Ushs 75 million Training Levy to be remitted to the Insurance Institute of Uganda is 0.5% of the gross written premium. Mandatory minimum reinsurance cessions Africa Re- 5% Zep-Re (PTA Re)- 10% Uganda Re 15%

19 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 xvi USEFUL RESOURCES A. Reports Swiss Re, Sigma Report No 3/2016 Global Insurance Review 2016 Uganda Annual Insurance Market Report 2015 Uganda Bureau of Statistics: 2016 Statistical Abstract Insurance players audited accounts and regulatory returns as at December 31st, 2016 B. Laws and Regulations The Insurance Act, (Cap213) Laws of Uganda, The Insurance Act, 2017 The Insurance Regulations, The Insurance (Amendment) Act, 13, 2011 The Insurance (Investment of Paid Up Capital and Insurance Funds) Regulations, The Insurance (Amendment of Brokers Minimum Paid-up Capital and Security Deposit) Instrument, 2013 The Motor Vehicle Insurance (Third Party Risks) Act (Cap 214) The Marine Insurance Act, 2002 Workers Compensation Act (Cap 225) Laws of Uganda, 2000 C. Websites Insurance Regulatory Authority of Uganda (IRA): Insurance Institute of Uganda: Ministry of Finance, Planning and Economic Development (MoFPED): Uganda Bureau of Statistics (UBOS): International Association of Insurance Supervisors (IAIS): Uganda Insurers Association (UIA): Uganda Retirements Benefits Regulatory Authority (URBRA): Uganda Association of Insurance Brokers: Capital Markets Authority:

20 xvi Insurance Regulatory Authority of Uganda TABLE OF CONTENTS STRATEGIC OVERVIEW OF IRA... iv BOARD CHAIRMAN S STATEMENT... viii CHIEF EXECUTIVE OFFICER S STATEMENT... ix THE YEAR 2016 IN BRIEF... x INDUSTRY STATISTICAL PERSPECTIVE... xi ACRONYMS... xiii GLOSSARY OF INSURANCE TERMS... xiv KEY INSURANCE INDUSTRY FACTS... xvi USEFUL RESOURCES... xvii 1. OVERVIEW OF THE INSURANCE SECTOR Licensing REGULATORY REFORMS AND NEW DEVELOPMENTS TO STRENGTHEN THE INSURANCE SECTOR PRUDENTIAL SUPERVISION OF THE INDUSTRY On-site Supervision Off-site Supervision MARKET CONDUCT Complaints Handling Product Approval CONSUMER EDUCATION DEVELOPMENTS AT THE LOCAL, REGIONAL AND INTERNATIONAL LEVELS GUIDANCE TO THE INDUSTRY FINANCIAL PERFORMANCE OF THE INDUSTRY Overall Performance Non Life Performance Life Insurance Performance Health Management Organisations Performance Uganda Reinsurance Company Performance...31

21 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, 2016 xix 9. FINANCIAL POSITION OF THE INDUSTRY Non-Life Financial Position Life Financial Position HMO Financial Position INSURANCE INTERMEDIARIES Insurance Brokers Loss Assessors/Adjusters GLOBAL INSURANCE PERSPECTIVE DETAILED STATISTICAL TABLES LICENSED PLAYERS... 80

22 CHAPTER 1 REGULATORY REFORMS AND NEW DEVELOPMENTS TO STRENGTHEN THE INSURANCE SECTOR The Insurance Act, Other Laws and Regulations in the Pipeline 2

23 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, REGULATORY REFORMS AND NEW DEVELOPMENTS TO STRENGTHEN THE INSURANCE SECTOR... An insurance broker or insurance agent who does not immediately remit the premium or other monies shall be liable to pay the premium or other monies due and interest to the insurer as a penalty The Insurance Act, 2017 During the period under review, the Authority made tremendous strides towards the overhaul of the Insurance Act, A new insurance law was subsequently assented to by H.E the President of Uganda, which has culminated into the Insurance Act The new Insurance Act introduces the following: Cash and Carry method of transacting insurance business: An insurance broker or an insurance agent shall not accept a cheque or other payable order from a policyholder or prospective policy holder in respect of a premium, or other monies, paid for or on account of an insurer or HMO in connection with an insurance contract or a proposed insurance contract unless the cheque or payable order is made payable to the insurer and that an insurance broker or agent that receives cash from, or on behalf of, a policyholder or prospective policyholder for or on account of an insurer shall a) Immediately but not later than the next working day of receipt remit the premiums to an insurer or HMO. b) Pay the cash without any deductions, whether for commission or otherwise, to the insurer, or into a bank account maintained by the insurer or HMO. An insurance broker or insurance agent who does not immediately remit the premium or other monies shall be liable to pay the premium or other monies due and interest to the insurer as a penalty. Risk Based Supervision: The Act stipulates that insurance players should be regulated and supervised on a risksensitive basis.this therefore introduces risk based capital whereby the capital of an insurer will be determined based on the risks they hold/ are exposed to. Control functions: The Act requires each insurance company and HMO to put in place for purposes of improving on their operational efficiency the following control functions, namely, actuarial, risk management, internal audit and compliance functions. Publication of the Authority s accounts: The Act provides for Annual publication of the Authority s financial statements in compliance with the requirements of the ICPs so as to promote transparency and best practices. The Authority shall publish its audited financial statements at least annually in a Uganda newspaper with wide circulation. Statutory Management: The new Act gives powers to the Authority to undertake statutory management of an insolvent company or issuance of directives in cases of distressed insurance players.

24 2 Insurance Regulatory Authority of Uganda REGULATORY REFORMS AND NEW DEVELOPMENTS TO STRENGTHEN THE INSURANCE SECTOR Continued Other Laws and Regulations in the Pipeline A. THE INSURANCE BANCASSURANCE REGULATIONS, 2016 The Authority developed Insurance Bancassurance Regulations during the year Subsequently, a number of Consensus Building Workshops on the Bancassurance Regulations 2016 were carried out with various stakeholders including both the insurance and banking sector players. The objective of these Regulations is to make provision for the regulation of bancassurance business; set forth the basis upon which the Authority will regulate Bancassurance; provide the licensing requirements; specify roles and responsibilities of parties engaged in Bancassurance; ensure professional and timely services and proper accountability of premiums; foster protection for prospects and policyholders, among others. The introduction and development of Bancassurance as a strategic distribution channel of insurance is one of the most significant developments in the Financial Sector. There are great expectations that bancassurance will compliment both in the Insurance and Banking sector and upon take off, it will grow to register a considerable position in the deepening of the insurance Market in Uganda. Banks command trust in the minds of public. It is one of the important reasons why the insurance industry seeks to enter into wide ranging partnerships with the players in the Banking sector. The Bancassurance distribution arrangement under the current draft Regulations allows Banks as a corporate agent to distribute insurance products through its existing branch network. This approach has the merit of allowing for the grooming of the bank staff to sell insurance products after receiving proper training. However Banks will need to designate a Bancassurance Principal Officer to be the focal point with responsibility to account for adherence to the provision of the Bancassurance regulations. These Regulations were further reviewed by all the pertinent stakeholders and were referred back to the First Parliamentary Counsel for finalization. B. MANDATORY VEHICLE INSURANCE BILL AND REGULATIONS As at the end of the period under review, the Mandatory Vehicle Insurance Bill and proposed Regulations thereunder were forwarded to the Ministry of Finance, Planning and Economic Development for review and approval. The proposals under the new Bill and Regulations include the following: Increase in the liability limits: The maximum liability limit under the existing MTPL Law is one million shillings per person per accident and in aggregate, the amount is ten million shillings per accident. The liability limits are too low to provide adequate compensation. Therefore the new Bill and Regulations propose an increase in liability/compensation limits to Ushs. 10 million under bodily injury/death; Ushs. 10 million for third party property damage and Ush. 100 million under aggregate. The shift from fault to no-fault insurance: Uganda s existing MTPL law is based on the fault principle, meaning that the insurer of the driver at fault shall pay compensation to all persons injured or the estates of persons killed by an accident at which the driver was at fault. Insurance based on the fault principle allows a driver to take out liability coverage to pay for claims from anyone injured in an accident in which the driver has been deemed at fault. Under the fault principle, it is difficult to establish or prove who is at fault in an accident. This in turn leads to uncertainty and lengthy conflicts between a driver, the insurance company and the injured parties. No-fault insurance solves this issue, because there is no need to establish the driver s fault under this type of insurance. The insurance company shall be required to make a compensation regardless of fault. Extension to cover property damage: The new Bill introduces cover for third party property damage which was not provided for in the existing MTPL Law. The limit under property damage is proposed at 10 million shillings.

25 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Mandatory vehicle insurance for Government Vehicles: To ensure that all injured parties receive coverage, the Bill requires that all vehicles in Uganda have insurance coverage including Government owned vehicles. The existing law includes an exemption for vehicles owned by the Government of Uganda. C. MICROINSURANCE AND MICROINSURANCE ORGANISATIONS REGULATIONS, 2015 Under the draft Microinsurance Regulations, both conventional insurers as well as specialist microinsurance organisations would be allowed to sell microinsurance. It is proposed that the specialist microinsurance organisations would be required to have much lower paid-up capital requirements. These regulations were reveiwed during the period under review. The objectives of the proposed regulations include the following amongst others: To extend access to a variety of formal insurance products appropriate to the needs of low income households, thereby supporting financial inclusion. Facilitate formalised insurance provision by currently informal insurance providers, and in the process promote the formation of regulated and well-capitalised insurance providers and small business development. To define capital requirements that reflect the risk profile of microinsurance products. Enhance consumer protection within the low income market segment through appropriate supervision and business conduct regulation, improved enforcement of regulatory transgressions, and consumer education interventions targeted at understanding insurance and its associated risks and benefits. Facilitate effective supervision and enforcement, supporting the integrity of the insurance market as a whole. D. POLICYHOLDERS COMPENSATION FUND REGULATIONS Draft Policyholders Compensation Fund Regulations were developed by the Authority during the year These regulations were reviewed and approved by the Technical Committee of the Authority Board and were thereafter forwarded to the full Board for consideration and approval. The Policyholders Compesation Fund would provide last-resort protection for policyholders and other beneficiaries in case an insurance company becomes insolvent and is unable to meet its claims. Therefore, the purpose of these Regulations is to make provision for the compensation of claimants of an insurer that has been declared insolvent by prescribing the manner for contribution to the fund, entitlement to payments from the Fund and all other matters concerning the governance and management of the Policyholders Compensation Fund for purpose of increasing the general public s confidence in the insurance sector. A reserve fund would be created and used to provide a level of compensation, which may not necessarily be full compensation, to eligible unpaid claimants under policies issued by licensees that do not meet the Minimum capital and other financial requirements under the Insurance Act and have been liquidated under the Insolvency Act, E. INSURANCE (CORPORATE GOVERNANCE) REGULATIONS The Authority also developed draft Insurance (Corporate Governance) Regulations during the year These regulations require insurers to establish and implement a corporate governance framework which provides for sound and prudent management and oversight of the insurer s business and adequately recognise and protect the interests of policyholders. Such a framework will be beneficial as it would, amongst others:

26 4 Insurance Regulatory Authority of Uganda REGULATORY REFORMS AND NEW DEVELOPMENTS TO STRENGTHEN THE INSURANCE SECTOR Continued... promote the development, implementation and effective oversight of policies that clearly define and support the objectives of the insurer; define the roles and responsibilities of persons accountable for the management and oversight of an insurer by clarifying who possesses legal duties and powers to act on behalf of the insurer and under which circumstances; set forth requirements relating to how decisions and actions are taken including documentation of significant or material decisions, along with their rationale; provide for communicating, as appropriate, matters relating to the management, conduct and oversight of the insurer to stakeholders; and provide for corrective actions to be taken for non-compliance or weak oversight, controls or management. Stakeholder engagements would be carried out on these draft Regulations in the subsequent years. F. INSURANCE APPEALS TRIBUNAL (PROCEEDURE) REGULATIONS, 2016 The Insurance Appeals Tribunal (Proceedure) Regulations, 2016 were developed during the period under review. The main objective of these Regulations is to guide on the procedure for the operation of the Insurance Appeals Tribunal once set up. The Insurance Appeals Tribunal would review the decisions of the Authority based on an appeal by an aggrieved person. These Regulations were reviewed and referred back to the First Parliamentary Counsel for finalization.

27 CHAPTER 2 PRUDENTIAL SUPERVISION OF THE INDUSTRY On-site Supervision Off-site Supervision Licensing 3

28 2 Insurance Regulatory Authority of Uganda PRUDENTIAL SUPERVISION OF THE INDUSTRY... This enables the Authority to identify problems early, act promptly and apply effective intervention so as to maintain an efficient, fair, safe, and stable insurance market for purposes of policyholder protection On-site Supervision The Authority carries out on-site inspections of insurance players in order to examine the business they conduct, the current and prospective solvency of a company, compliance with the Insurance Act and Regulations and the level of exposure of insurance players to risks. This enables the Authority to identify problems early, act promptly and apply effective intervention so as to maintain an efficient, fair, safe, and stable insurance market for purposes of policyholder protection. The table below shows the number and nature of inspections carried out during the year Insurance branches Bond Verification Branch Agency Offices General Inspection Office Premises Targeted Inspection Broker General Insurer HMO 1 1 Life insurer Loss Assessor 3 3 Grand Total Grand Total Specific focus was placed on a number of operational and financial areas so as to: Determine the insurer s financial position, capital adequacy and the quality of its assets and operations so as to ensure that companies do not operate in a manner detrimental to the interest of the policyholders; Assess and appraise the competence and capability of the insurer s management and staff, as the quality of the management would impact on the soundness of its operations; Ascertain whether the insurer is complying with the provisions of the Insurance Act and Regulations, guidelines issued by the Authority, as well as other applicable laws and regulations; Evaluate the adequacy of an insurers records, systems, and internal controls; Evaluate the adequacy of technical provisions and reinsurance management; Analyse the level of liquidity and the extent of exposure to subsidiaries and related parties through transactions ; and Test the accuracy and validity of data submitted through returns to the Authority. During the inspection of branch/agency offices, specific focus was placed on: Suitability of office premises so as to uphold the image of the industry; Licensing status of the agents selling insurance so as to ensure that qualified people sell insurance; Premium rating and vices such as undercutting; and Assessment of the qualification status of branch/agency management.

29 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Off-site Supervision During the year 2016, the Authority carried out a review and analysis of audited accounts, regulatory returns, actuarial valuation reports for 2016, quarterly unaudited returns, reconciliation statements, investment statements, amongst others. In the process, a number of weeknesses were identified and neccessary corrective action was taken. 2.3 Licensing In order to protect the interests of policyholders, the Authority licenses insurance players on an annual basis and only those that meet the specified requirements are licensed. During the period under review, the Authority licensed the following number of insurance players. Licensed players Reinsurers Non Life Insurers Life Insurers HMO s Insurance Brokers Reinsurance Brokers Loss Assessors/Adjusters/Surveyors Insurance agents ,296 The insurance market registered the exit of one of the largest insurance companies, M/s AIG Insurance (U) Ltd. This was mainly due to their change in strategy towards investment in African markets. PTA Reinsurance Company opened a liaison office in Uganda during the period in addition to Africa Reinsurance Corporation which had opened earlier. The presence of these Re-insurers in the country will help enhance the capacity of the local companies.

30 CHAPTER 3 MARKET CONDUCT Complaints Handling Product Approval Licensing 7

31 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, MARKET CONDUCT... Product approval is one of the key areas of market conduct that the Authority focuses on. The main reasons for the approval of new insurance products are to; promote fair treatment of policyholders through ensuring that the policy terms and conditions are fair... In order to build trust and confidence in the insurance sector of Uganda, the Authority has put alot of empasis on market conduct aspects. Appropriate oversight is placed on the ways in which insurance companies distribute their products in the marketplace as well as how they treat their customers. Through effective monitoring of the market conduct of players, the interests of policyholders and beneficiaries are protected. Some of the main market conduct activities are indicated below: 3.1 Complaints Handling The handling of complaints in a timely, effective and fair way is an important aspect in maintaining trust in the insurance sector and therefore, a key part of the consumer protection framework. During the period under review, the Authority continued to play its cardinal role of protecting the policyholders. A total of 144 complaints were received by the Authority in 2016 out of which 68 were settled, 42 remained pending, 34 were closed for various reasons (i.e, claimants having no locus standi to file the complaints, complainant failing to furnish further and better particulars of a complaint after several reminders, filing a complaint which is not within the mandate of the IRA and some complaints were subjudice). The graph below illustrates the nature and number of complaints received in 2016

32 6 Insurance Regulatory Authority of Uganda MARKET CONDUCT Continued... It can be noted from the graph herein above that the largest number of complaints registered were in respect of delayed payment of claims/bills. 3.2 Product Approval Product approval is one of the key areas of market conduct that the Authority focuses on. The main reasons for the approval of new insurance products are to; promote fair treatment of policyholders through ensuring that the policy terms and conditions are fair; maintain an orderly market; reduce risk of insurance company failures by ensuring that players do not take on risks without capacity; and ensure compliance with the provisions of the Act and Regulations and other applicable laws. During the year 2016, the Authority reviewed and approved nine (9) new insurance products. A list of the approved products is indicated in the table herebelow: Insurance Company Product Risks Covered/Benefits CIC Life Smart Saver Insurance Policy/ Invest Plan Product This is a savings Plan that allows the policy holder accumulate capital between 5 to 25 years. The benefits to the policy are listed here below; - A final lumpsum of 100%of sum assured inclusive of reversionary and terminal bonuses. - A life Cover with various optional benefits as policy holder may choose The Optional Benefits that can be selected by the policy holder at inception are; - A percentage of sum asured will become payable if the policy holder is involved in an accident resulting into death, disablement or medical costs - A percentage of 100% of sum assured will be paid on death due to personal accident - 100% of sum assured payable on loss or total and permanent loss of use of two limbs or sight on both eyes - 100% of sum assured payable on loss or total permanent loss of use of one limb or sight on one eye - Sum assured of 1% per week per Accident due to permamnet or temporary disablement other than above from engaging in any occupation - Waiver of Premium on Critical Illness - Double Accident Benefit; 100% of sum assured with accrued bonuses plus terminal bonus on death of policy holder if death was caused by an accident. This is payable in addition to any death benefit on the main policy - Funeral Expense of 15% of sum assured payable on death of policy holder

33 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, ICEA Life Teleka Smart Saving Policy Bamaleko Plan Family Income Fund Product - 50% of the Sum Assuredwith accrued bonus payable if the policy holder is diagnosed with a critical Illness as the policy cover and benefits continue unbated until maturity. Product is composed of 2 components: an Insurance Savings component whose premiums are invested in an investment account net of commission and Management Expenses, and a Term Assurance component. The Benefits are; - A 10 year term Assurance with a fixed sum assured payable on the accidental death of a policy holder - On Death due to natural causes, the sum assured will be paid out in a scaled structure starting at 10% of sum assured in the first year with an increase of 10% per year in which the policy holder dies until the maturity of the term assurance - A survival Benefit of 50% of the Term Assurance Cover premium is refunded and the accumulated Savings plus interest in the Investment Account - Investment Guarantee of a minimum return of 5% per annum on the Investment portion of this product Education This is an Education Term Assurance product that provides a cash payout to the school in the event of death, permanent Total Disability or Critical Illness by Parent or Guardian. The cash payout is meant to cater for the fees of the child. - On Death or PTD of policy holder during the term of the policy, the full sum assured times the period remaining for completion of studies in the current school of child - A benefit of 50% of the death benefit is payable on diagnosis of the policy holder with a critical Illness - A last Expense of Ugx1,000,000 is payable on death of the child or parent or guardian This product pays a regular payout to the beneficiaries of the policy holder on his/her death within a pre-defined term - The Product is designed to convert a lump-sum payment to the beneficiaries of a deceased policy holder to a series of annual payments based on lumpsum payment paid by ICEA Life - An Initial Benefit of 3.5% of the lumpsum shall be paid to the named beneficiaries immediately on death of the policy holder - The Remaining Benefits shall be paid annually to the beneficiaries for the duration of the contract and shall escalate by 10% per annum

34 8 Insurance Regulatory Authority of Uganda MARKET CONDUCT Continued... Liberty Life Assurance Uganda Ltd NOVA Insurance Company Ltd - There shall be an annual guaranteed return of 7% on the average monthly balance in the Family Income Fund Business Owners Life Insurance Product The BOLI Product is tailor made to target the Small Medium Enterprise Owner. BOLI is a bundling of death, critical Illness, physical Impairment and funeral cover for two persons. The Benefits are; - Whole life Cover that provides a lumpsum of sum assured on death - Instant Aid that provides an additional lumpsum on death equal to 10% of the life Cover amount chosen - An optional Benefit that provides a lump sum on a defined disability equal to 50% of the life cover amount chosen - An optional Benefit that provides a lump sum on a defined critical Illness equal to 50% of the life cover amount chosen - An optional Benefit that provides a lump sum on the death of any family member covered Travel Insurance The Benefits under this travel policy are; Policy - Paymemt of a sum assured of 100% to the insured or his estate in case of; Death, Permanet Total Disability, Loss of one limb or more limbs, loss of sight that is one eye or both eyes. - Payment of the cost of Emergency medical expenses and Emergency Medical Evacuation - Compensation for the loss or delay of checked baggage - Personal Liability. Indemnity of the insured for the legal liability of the insured for accidental injury to third parties or accidental damage to their property. - Hi-Jack. The company shall pay to the insured $50 for each and every complete 24 hour period upto $500 in the event of hi-jacking or unlawful seizure of the aircraft in which the insured is traveling - Loss of Passport. If during a trip the Insured loses their passport, the company will compensate the insured upto a maximum limit of $500 with excess of $100 for the costs incurred to obtain a duplicate or fresh passport. - Cancellation and Curtailment. If the Insureds trip is unavoidably cancelled or the insured has to return to their home country before the scheduled return date, the company will refund the insured upto $1000 with an excess of $100.

35 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Britam Insurance Company Uganda Ltd Alliance Africa General Insurance Ltd U-Mobile Insurance Products including Hospital Cash and Fracture Loyalty Cover - Travel Delay. In the event of delay of the insured s planned first outward flight,the company will pay the insured $10 per 12 hours up to a maximum of $100 with an excess of 12 hours These are micro insurance products that are sold through a mobile Phone platform partnering with Uganda Telecom and Inclusivity Solutions Africa. Focus is onto the informal sector segment of self employed people. - Hospital Cash Product which is offered at a premium to UTL mobile subscribers. It will be available in two options, that is Individual Cover and Family Cover option. - The Benefits are; Fixed Payment to the subscriber per night that any insured person stays at a medical facility after 3 nights of admission. - Fracture Loyalty Cover will be offered for free to a certain segment of UTL subscribers which will cover one beneficiary and is renewable monthly depending on the subscriber s use of certain UTL Services. - The benefits include; Ugx200,000 per incident leading to one or more broken bones. Doubling to Ugx400,000 if an M-sente mobile wallet transaction was conducted in the previous month Travel Insurance Policy This Policy is meant to cover the insured when he/she travels out of his home country for a specific time period as agreed with the insurer. The Benefits under this travel policy are; - Paymemt of a sum assured of 100% to the insured or his estate in case of; Death, Permanet Total Disability, Loss of one limb or more limbs, loss of sight that is one eye or both eyes. - Payment of the cost of Emergency medical expenses and Emergency Medical Evacuation - Hospital Benefits; The Insurer will pay $10 per 24 hours upto a maximum of $100 for which the insured is an inpatient in a hospital as a result of accidental injury or illness. - Compensation for the loss or delay of checked baggage - Personal Liability. Indemnity of the insured for the legal liability of the insured for accidental injury to third parties or accidental damage to their property.

36 10 Insurance Regulatory Authority of Uganda MARKET CONDUCT Continued... UAP Life Assurance Mobile Savings Product Cente ZO - Hi-Jack. The company shall pay to the insured $50 for each and every complete 24 hour period upto $500 in the event of hi-jacking or unlawful seizure of the aircraft in which the insured is traveling - Loss of Passport. If during a trip the Insured loses their passport, the company will compensate the insured upto a maximum limit of $200 for the costs incurred to obtain a duplicate or fresh passport. - Cancellation and Curtailment. If the Insureds trip is unavoidably cancelled or the insured has to return to their home country before the scheduled return date, the company will refund the insured upto $1000 with an excess of $ Travel Delay. In the event of delay of the insured s planned first outward flight,the company will pay the insured $10 per 12 hours up to a maximum of $100 with an excess of 12 hours This product is aimed at helping policy holders save for a goal that is specified or selected at outsete.g education. - The Product will allow Policyholders to save any amount regularly or as they have money available upto a specified maximum. - Investment Returns in the form of regular bonuses will be declared monthly in arrears. - Upon Maturity of contract, the policyholder may choose to cash out the accumulated funds or renew the contract. - On Death of the insured, the policy holder will pay out the account balance plus an amount equal to half the account balance. The additional death benefit will be capped at a maximum limit of Ugx2,000,000

37 CHAPTER 4 CONSUMER EDUCATION 12

38 12 Insurance Regulatory Authority of Uganda CONSUMER EDUCATION... The goal of consumer education therefore is to provide individuals, households and firms with knowledge and skills to improve their ability to manage risk. This is important both to encourage greater demand for insurance, and to enable clients to get more value for their money from the insurance products and services... Financial education cannot make insurance more affordable for the poor but it can ensure that people have accurate information and sufficient financial literacy so that they are able to choose insurance products that are appropriate to their needs. Whereas there is a business case for public education, there is a developmentally social case too. If unforeseen incidents happen to families with insurance for example, they are less likely to be plunged into poverty. This way, financial education can address at least one of the causes of poverty through increasing uptake of insurance. Considering the facts that as insurance markets become increasingly sophisticated and people assume more of the responsibility and risk for financial decisions, financially educated individuals are necessary to ensure sufficient levels of investor and consumer protection as well as the smooth functioning, not only of insurance markets, but also of the economy as a whole. The goal of consumer education therefore is to provide individuals, households and firms with knowledge and skills to improve their ability to manage risk. This is important both to encourage greater demand for insurance, and to enable clients to get more value for their money from the insurance products and services. In fulfilling one of its mandates of promoting a sound and efficient insurance market in the country, the Authority set out various public awareness and consumer education programmes with the depth and breadth constrained by availability of financial resources. Nevertheless, efforts were made in the following areas: Regional Awareness and literacy programmes The Authority continued to undertake awareness programmes at regional levels. In particular, the Authority covered the Districts of Arua, Kabale, Mbale, and Bushenyi-Ishaka. Engagements were held with, and information disseminated to, over twenty-thousand people including 50 Educational Institutions both Secondary and tertiary. Local Government Leaders were also engaged in discussions focusing on policy issues. Of particular importance was the issue of enforcement of existing insurance laws especially Section 18 of the Workers Compensation Act that makes it compulsory for all employers to insure their workers against liabilities arising from work-related injuries, death or diseases. General lack of knowledge on the existence and working of such provisions and strong will to have it enforced were expressed. Other areas of interest that we ought to follow through in the coming period include insurance for commercial properties as well as public liability insurance for all public places.

39 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Exhibitions In 2016, the Authority participated in five exhibitions, two of which were organized by the Uganda Manufacturers Association both in Kampala and at Regional level (Mbarara). The other exhibitions were the 24th Source of the Nile National Agricultural show organized by the Uganda National Farmers Federation (UNFFE), the 8th Banking, Finance and Insurance Expo organized by Royalway Media and the CBS PEWOSA trade show. We have leveraged on these platforms to educate the public about the relevance and working of insurance as well as the rights and obligations of policy holders. Because of the nature of exhibitors, we took advantage to educate the public about the existence of agricultural insurance and the government s support to the same in respect to the premium subsidy. Media Relations The Media plays an important role in the dissemination and sharing of information about insurance service provision. During the year, IRA engaged the media through various activities including media releases on the licensed insurance players for the year 2016, industry performance for 2015, the exit of AIG insurance company from the Ugandan Market among others. The Authority further organized media interviews, attended various radio talk shows on both local Radio Stations and upcountry stations including Bushenyi FM, Freedom FM in Kabale, Step FM in Mbale and Nile FM in Arua (West Nile region). These talk shows were held during the regional awareness programmes. In addition, regular networking sessions with journalists of the print particularly the New Vision, Daily Monitor, Observer News paper, the East African News Paper, the Independent Magazine, the CEO s Magazine and electronic and online media were held in the year In the year under review, there were over 100 news paper reports (Articles) on the industry which points to the increased media interest in the insurance sector. Online initiatives IRA continued to update its website content during the reporting period to avail appropriate and timely information to the public. Additionally, to reduce on paper traffic, the online registration portal for Agents is planned to be enhanced to provide for other players with a view of reducing the turn-around time for licensing. The website also has a form where complaints can be filled and lodged to the Authority s Complaints Bureau for quick redress. To leverage on the fast-growing power and influence of social networks, the Authority has continued to make its facebook page more interactive, informative and up-to-date. Challenges Despite the numerous efforts made in the reporting period, several challenges remain. Resources both in terms of funds and manpower continue to limit the scope and frequency of the awareness/education drives. Additionally, lack of an established Monitoring and Evaluation framework for these programs has made evaluation of impact unattainable. Going forward, these issues will be fed into the new strategic plan 2017/ /22 which is expected to enhance the Authority s effectiveness in executing its mandate.

40 CHAPTER 5 DEVELOPMENTS AT THE LOCAL, REGIONAL AND INTERNATIONAL LEVELS 15

41 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, DEVELOPMENTS AT THE LOCAL, REGIONAL AND INTERNATIONAL LEVELS... An agriculture insurance consortium was established and currently has 10 nonlife insurance companies. The consortium is managed by the Uganda Insurers Association and offers crop (yield and index based products), live stock and aquaculture insurance products. A small scale farmer is subsidied upto 50% of the premium payable while a large scale farmer is subsidised at 30%.... LOCAL DEVELOPMENTS Hosting of the 44 th African Insurance Organisation (AIO) Conference Agricultural Insurance Partnerships Workers Compensation The 44 th AIO Conference and General Assembly was successfully held from the 21 st to 24 th May 2017 at the Commonwealth Speke Resort Munyonyo. The CEO of the Authority, Alhaj Kaddunabbi Ibrahim Lubega was confirmed as the new AIO President. A number of key lessons were drawn from the various discussions that were held. The Government of Uganda set aside Ushs. 5 billion as an agricultural insurance premium subsidy. The premium subsidy started in the FY 2016/17 and would be rolled out over a five year period. An agriculture insurance consortium was established and currently has 10 non-life insurance companies. The consortium is managed by the Uganda Insurers Association and offers crop (yield and index based products), live stock and aquaculture insurance products. A small scale farmer is subsidied upto 50% of the premium payable while a large scale farmer is subsidised at 30%. On the 6 th March 2017, the Authority signed an MOU with the Institute of Corporate Governance of Uganda (ICGU). The MoU formalizes the relationship and cooperation between IRA and ICGU in strengthening good corporate governance values amongst entities regulated by the Authority through capacity building, research and development and adherence to sound corporate governance practices. On the 3 rd February 2017, the Authority entered into an MOU with Financial Sector Deepening Uganda. The (MoU) formalizes cooperation between IRA and FSDU in strengthening the legal and regulatory framework for micro-insurance, developing IRA s institutional capacity to regulate the micro-insurance industry, as well as create awareness among stakeholders on the usage and benefits of micro-insurance. In an effort to promote the development of the insurance sector, a draft MOU between the Authority and the Ministry of Labour, Gender and Social Development was developed, reviewed and sent to the Solicitor General (SG) for advice. The MOU provides for joint inspections between the Authority and Ministry of Labour of employees to ensure compliance of employers. The Authority also carried out a two-day training for KCCA Labour Officers on the Workers Compensation insurance policy.

42 16 Insurance Regulatory Authority of Uganda DEVELOPMENTS AT THE LOCAL, REGIONAL AND INTERNATIONAL LEVELS Continued... Takaful National health Insurance Scheme Uganda Oil and Gas Co-insurance Syndicate Motor Third Party Mobile payment platform With the assistance of the Islamic Development Bank (IDB), a mission visit to Uganda, led by Br. Ahmad Fadhlan bin Yahaya was carried out from the 9 th to 12 th May During the mission visit, discussions were held regarding the strategic development plan for the insurance/takaful industry in Uganda; reviewed, discussed and agreed upon the scope of the proposed technical assistance. The Consultant also visited various insurance players and other stakeholders in order to obtain a buy-in and commitment from various stakeholders. The Authority continued participating in the National Task Force activities which among others include designing the National Health Insurance Scheme. The Ministry of Health is spearheading the project. The Certificate of Financial Implication was provided by the Ministry of Finance, Planning and Economic Development and the NHIS Bill was forwarded to Parliament for review and approval. The Authority also approved the arrangements for Uganda s Oil and Gas syndicate under a co-insurance basis. Total Risk Solutions (London) Ltd becomes the Syndicate Consultants and the Uganda Reinsurance Company the manager. The Authority held discussions with URA and UIA about putting in place a Motor Third Party mobile payment platform. The mobile payment platform was tested through a pilot run which was successful. Implementation of the same is at the final stages and the Ministry of Works and Transport is expected to authorise URA to share the motor vehicle database before implementation is undertaken. REGIONAL DEVELOPMENTS The EAC Insurance policy/national Insurance policy The EAC insurance policy was approved by the Council of Ministers. The policy highlights salient issues in the EAC insurance industry that need to be resolved in order to achieve the EAC integration. The key policy issues include those related to integrating the legal, regulatory and institutional framework in the region in line with best practices; standardizing licensing standards for purposes of mutual recognition of licensed players in the region; development of a comprehensive fraud risk management framework and anti-money laundering requirements; removal of investment restrictions within the EAC Partner States; development of policies and legal frameworks for insurance of Government assets and liabilities; Partner States to make provisions for the establishment of a Policyholder Compensation Scheme in each Partner State; streamlining payment of premiums to insurers; establishment of offices of the Ombudsman at regional level and in each Partner State and the establishment of an ad hoc insurance Appeals Tribunal in each Partner State. In view of harmonization, a draft National insurance policy has been developed along the same principles.

43 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, INTERNATIONAL DEVELOPMENTS Anti-Money Laundering Accounting Changes (IFRS 17) The Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) carried out the 2 nd Mutual Evaluation of Uganda in June The Assessors produced a report which was approved by the Senior Officials of the ESAAMLG during their meeting which took place in Arusha in April, The report was considered by the Council of Ministers in September, 2016 and approved. Uganda has started to work on areas where they have deficiencies in so that we can comply. Meantime, Uganda has amended a number of Laws such as the Financial Institution s Act, the Anti-Money Laundering Act, the CMA Act, the Anti-Terrorism Act and The Insurance Act to ensure compliance with the Financial Action Task Force (FATF) requirements on Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) Laws. Uganda has conducted a National Risk Assessment which will go a long way to enable it be complaint with the FATF standards and the ESAAMLG assessment findings. The IASB released IFRS17, the new accounting standard for insurance contracts, in May 2017 after struggling with this topic for about twenty years. It will replace the intermediate IFRS4 standard that was introduced as at 1 January Insurance companies that apply IFRS will have to start using the new standard from 1 January 2021 onwards. This change will generally be very significant, hence, the preparations needed for it shall not be underestimated. Nevertheless, because IFRS17 will be a major improvement compared to the current IFRS4, it will be worth making these efforts. There are two reasons for this. Firstly, it will harmonize the methodologies that are used around the world for the valuation of insurance liabilities in the Financial Statements, even within Group insurance companies; this will make the statements of different insurers much better comparable. Secondly, and this is very important from a supervisory perspective, it will guarantee that the technical provisions of Life insurance companies are adequate. In particular, the contractual service margin, as a required new component of the technical provision, shall be non-negative, meaning that the corresponding layer of insurance policies is not expected to be loss-making in the future.as a consequence, it is expected that the insurance supervisors will allow insurance companies to recognize the contractual service margins under IFRS17 as available capital under a Risk-Based Capital regime for the calculation of the capital requirements.

44 CHAPTER 6 GUIDANCE TO THE INDUSTRY 19

45 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, GUIDANCE TO THE INDUSTRY... The Authority issued a reminder to all Non-life Insurance Companies to ensure that Catastrophic Reinsurance Protection is included in the treaties.... The Authority continued to provide guidance to insurance players on a number of pertinent aspects. Here below are some of the notable areas in which the Authority issued guidance: a) Rating of Risks not specified in the Approved Minimum Premiums Schedule In a bid to efficiently manage the numerous requests for change of the minimum premium rates for small risks which has led to unnecessary reduction in the minimum premium rates, The Authority issued guidance to the Insurance Players informing them that going forward the Rating committee will; Handle the unrated risks as per the approved schedule of minimum premium rates. Handle risks which are not specifically included in the minimum premium rates. Propose the rates which will be forwarded by Insurance Companies for their approval. In addition, all risks that need fronting or approval should be forwarded to the committee for a recommendation on the rating before request for approval is sent to the Authority. The Rating committee will therefore not accept any change in the rates as provided in the minimum premium rates schedule. The Authority re-emphasized the compliance and adherence to these minimum premium rates by The Insurance Companies and Insurance Brokers. b) Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Self-Assessment As part of the National Risk Assessment Programme, The Financial Intelligence Authority developed an AML/CFT Self- Assessment questionnaire which outlines the core requirements of an AML/CFT prevention programme in the Insurance Sector. In Pursuit of its mandate, the FIA follows International Standards set up by the Financial Action Task Force(FATF). The International Standards on combating money laundering and financing Terrorism require Companies to identify, assess, and understand the money Laundering and terrorist financing risks. Where Companies identify higher risks, they should ensure that their AML/CFT regime adequately addresses such risks and where lower risks are identified, they may decide to allow simplified measures for some of the FATF recommendations under certain conditions. c) Financial Statements and Regulatory Returns of Health Management Organisations (HMO s) On the 7 th of April 2016, The Authority held a meeting with Finance Officers/Accountants of HMO s wherein there was a presentation on the format of the financial Statements and regulatory returns required to be submitted by the HMO s which is in line with the Insurance Act Cap(213), Laws of Uganda 2000 and the Insurance Regulations 2002 and the International Financial Reporting Standards.

46 20 Insurance Regulatory Authority of Uganda GUIDANCE TO THE INDUSTRY Continued... With effect from the 1 st of May, 2016, the Financial Statements, Management Accounts and Regulatory Returns were submitted in the following format; Statement of Financial position Statement of Comprehensive Income Statement of Changes in equity Regulatory Returns as per the Insurance Regulations 2002 Other Reports/Manuals fully approved by HMO s Board. d) Introduction of the Insurance Agents Association (UIAA) Executive Committee Members A new Executive Committee was elected by the Agents for their Association UIAA. As a Regulatory Authority we recognize the role that the Agency force plays in fostering the development of the Insurance Sector in Uganda. Effective mobilization of the force by leveraging on the Association platform should therefore be supported. e) Draft Bancassurance Regulations It has been recognized that the use of Financial Institutions licensed by the Central Bank as Alternative Distribution Channels and access to their customer base if harnessed can promote increased accessibility to insurance services and products. While S.37 of the Financial Institutions Act had prohibited Banks from engaging in insurance, the enactment of the Financial Institutions (Amendment) Act, 2016, particularly S.115D now allows Financial Institutions to engage in Bancassurance and empowers the Insurance Regulatory Authority of Uganda to prescribe the manner and format in which Financial Institutions may engage in this business. Therefore in consultation with the Minister under section 98 of the Insurance Act Cap.213,the Authority enacted the Bancassurance Regulations 2016 that gave effect to the provisions of the Act by making provision for the regulation of Bancassurance business. f) Business Continuity Management Plan It has come to the attention of the Authority that some insurance companies do not have formal arrangements for Business Continuity Management. It is therefore important that insurers as risk carriers come up with Business Continuity Manage.ent Plans so as to; Provide an acceptable level of business until normal operations are resumed i.e. settlement of claims and underwriting policies. Minimize financial losses. Provide continuity of management despite absence or injury of key personnel. Provide for safety of staff, customers and other stakeholders. g) Monetary and Financial Statistics On the 25 th of July 2016, The Insurance Regulatory Authority of Uganda in collaboration with Bank of Uganda and The International Monetary Fund expanded the coverage of Monetary and Financial Statistics to the Insurance Sector in Uganda. The Main purpose of collecting monetary and financial statistics is to enhance monitoring of financial stability and guide policy formulation.

47 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, h) Inspection of Insurance Companies to confirm authenticity of Performance Bonds Issued to Government Agencies On the 9 th of August 2016, The Insurance Regulatory Authority Officers inspected the offices of the Insurance Companies to verify the validity of bonds issued to the different Government Agencies/Ministries. This verification process is key and pertinent to the Insurance Regulatory Authority which is mandated to advise Government on the adequacy of their Insurance Covers. i) In Country Consultations on the Draft EAC Insurance Policy The Republic of Uganda was directed to undertake necessary in-country consultations among key stakeholders in Uganda and report back in the next Sectoral Council of Finance and Economic Affairs Meeting with a view of concluding the EAC Insurance Policy and its corresponding draft EAC Insurance Implementation Strategy. Therefore, on the 9 th of September 2016, The Insurance Regulatory Authority of Uganda and The Uganda Insurers Association organized a workshop to enable the participants have a consolidated position. j) Insurance Advertisement Guidelines, 2016 On the 27 th of September, 2016, The Authority provided Insurance Advertisement guidelines to the Insurance Players or any other person with the aim of shaping the content and form of their advertisements in a manner that is not misleading to the public. These guidelines shall apply to the advertisement of any approved insurance product. Among the many guidelines issued, The Authority advised that; Licensees shall be honest, fair and avoid practices that may impair the confidence of the public who are influenced by advertisements for products and services. Advertisements should be made per licensee with the name by which the licensee was licensed. The Licensee should make use of The Regulatory Disclosure statement. Any rating/award to the licensee should be based on the individual entity and not its group. Use of the words Leading, Best shall be factually accurate and the source and period of such an award must be disclosed. An Advert should not make unfair, incorrect or unverifiable comparisons with competing companies or products. The Insurance Players must be informed that Remedial Measures will apply to an advert that is found misleading. k) Travel Insurance Guidelines 2016 The Authority noted that some consumers of travel Insurance were experiencing challenges in the way the products are marketed and sold which are contrary to the provisions of the Act. The Authority after consultation with the Uganda Insurers Association developed Travel Insurance Guidelines to enhance transparency, ensure disclosure of information to policy holders of Travel Insurance and to improve the current consumer satisfaction levels. All Insurers conducting Travel Insurance business are hereby required to ensure customers are provided with key facts summary documents that should disclose the following information; Scope of Coverage i.e.(benefits, Key risks and Exclusions), Geographical limits,contact Numbers (Toll free)

48 22 Insurance Regulatory Authority of Uganda GUIDANCE TO THE INDUSTRY Continued... Requirement for pre authorization of medical procedures, in line with the policy provided by the company Policy Duration, Cancellation and Claims procedures including what should be done in case of emergency. All Insurance Players are hereby required to ensure that they abide by the guidelines stipulated above. l) Catastrophic Reinsurance Protection Catastrophic Reinsurance Protection is a key policy in this industry given the risks that are being covered. However, it has been noted that some companies take on risks beyond their underwriting limits without seeking Catastrophic Reinsurance Protection. For instance, most treaty arrangements do not cater for the looming catastrophic events such as hailstorms, floods, earthquakes and many others which can occur. The Authority therefore issued a reminder to all Non-life Insurance Companies to ensure that Catastrophic Reinsurance Protection is included in the treaties.

49 CHAPTER 7 FINANCIAL PERFORMANCE OF THE INDUSTRY Overall Performance Non Life Performance Life Insurance Performance Health Management Organisations Performance Uganda Reinsurance Company Performance 36

50 24 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY... The gross claims paid for both life and Non-life insurance (including HMOs) has increased from UShs 213 billion in 2015 to UShs 259 billion in This represents a 21.5% growth of claims paid out Overall Performance In the year 2016, the gross premium underwritten by the insurance industry increased from UShs 612 billion in 2015 to UShs 634 billion in This represents 3.6% growth. Non-life insurance business continued to dominate the industry in terms of premiums underwritten with 70.9% down from 75.99% in Life insurance business on the other hand accounted for 20.87% up from 16.34% in 2015 while Health Membership Organizations (HMOs) accounted for 8.22% up from 7.67% in Despite the dominance of the Non-life segment, the Life Insurance segment continued to grow relatively much faster at 32.7% in 2016 compared to Non-life and HMOs which grew by -3.06% and 8.25% respectively. The phenomenal growth in the life segment despite the difficult economic times is attributed to the effective separation of the hitherto composite companies, product innovation, aggressive marketing by individual companies and offer of attractive bonuses, among others. In addition, insurance customer servicing in this segment has greatly improved as some companies have started issuing quarterly statements and declaring annual bonuses. The relative importance of this segment is expected to grow even higher in the medium term as the middle income class expands. The gross claims paid for both life and Non-life insurance (including HMOs) has increased from UShs 213 billion in 2015 to UShs 259 billion in This represents a 21.5% growth of claims paid out. Net Asset base The Insurers (including HMOs) Net Asset base (i.e. Assets less Liabilities) has also increased from UShs 373 billion in 2015 (Shs. 373,037,799,484) to UShs 407 billion (Shs. 407,728,630,605) in 2016, representing a growth of 9.3%. The sustained growth of the insurers asset base highlights the growing strength of companies to handle insurable risks locally and provide adequate protection to the insuring public. Factors for the decline in performance The performance of insurance as a sector is inextricably linked to the performance of the economy as a whole. The decelerated growth of 3.6% posted in 2016 was largely attributed to the difficult economic conditions that our economy has undergone. The following are singled out: I. The impact of uncertainties, resulting from the elections, on the economy in the first half of According to World Bank, the electoral cycle held back economic activity, as would be expected. Over the first half of the year, economic indicators were downbeat suggesting much lower aggregate demand than anticipated. There was depreciation of the shilling and high interest rates on loans which created a slow-down in investment thus affecting the growth of the insurance industry.

51 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, II. III. The subdued growth of Uganda s economy arising from among other things slow growth in Uganda s major trading export partners (Europe, China, and S. Sudan). The fresh crisis (in July, 2016) in South Sudan, one of Uganda s biggest export markets meant that an estimated weekly earning of USD 8m (UShs 28b) from business could not be realised. In addition, with the global economy facing turbulence, remittances by Ugandans living abroad significantly reduced hence affecting sectors such as the real estate. Similarly, economies such as China could not continue buying in bulk or give out the soft loans as it used to. The increasingly stringent conditions for borrowing occasioned by worsening quality of loans reduced private sector credit. IV. In regard to public spending, Government released funds but actual implementation of projects remained low. V. Decline in Agriculture due to the prolonged drought resulting from the effects of climate change and environmental degradation. Please note that the above notwithstanding, there was notable growth in the life segment owing to: I. Increased consumer confidence in the sector resulting from enhanced regulatory and supervisory regime (improved policy wording, and complaints redress mechanisms, claims guidelines etc). II. III. IV. The increased momentum in awareness and public education drives by the Authority, pertinent Associations and individual players. More aggressive marketing by Individual Insurance players coupled with improved customer service. More appealing products (education products, endowment, annuities etc). 7.2 Non Life Performance Non life gross written premium income decreased from Ushs 464 billion in 2015 to Ushs 450 billion in Premium ceded on account of non-life business decreased from Ushs 217 billion in 2015 to Ushs 185 billion in Non-life gross claims paid increased from Ushs. 152 billion in 2015 to Ushs. 167 billion in Net incurred claims on account of non-life business decreased from Ushs 106 billion in 2015 to Ushs 105 billion in 2016 resulting in a decrease in the industry average loss ratio from 44.86% in 2015 to 40.90% in Non life underwriting results increased slighlty from Ushs. 7.1 billion in 2015 to Ushs 12.4 billion in 2016 Here below are class-wise summaries of the non-life performance in 2016

52 26 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY Continued... Non-life class-wise gross written premium income ( 000 Ushs) Class Fire 56,934,210 62,603,177 67,750,306 74,131,158 80,333,217 Marine/ 21,760,295 24,525,654 26,782,156 28,702,481 28,495,203 Aviation Motor 90,052, ,658, ,463, ,005, ,870,156 Public Liability 9,868,560 13,091,273 8,241,291 10,028,898 10,593,386 Work. Comp 13,174,484 14,201,336 19,474,646 20,005,926 19,247,580 Burglary 7,400,528 8,949,813 8,810,354 9,981,515 8,700,269 Engineering 22,969,985 19,960,960 21,752,139 62,508,609 20,882,239 Personal 29,647,239 35,298,891 34,892,242 37,531,697 41,756,318 Accident Bonds 5,898,479 7,133,529 9,476,651 7,630,731 8,908,194 Medical - 33,694,610 48,286,648 46,180 62,299,535 Misc. Accident 55,268,110 31,271,253 31,411,401 95,855,019 49,096,819 Total 312,974, ,389, ,340, ,427, ,182,916

53 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Non-Life Insurance Companies No Name of the Company 2016 Gross claims paid 2015 Gross claims paid Percentage Change(%) 1 Jubilee Insurance Company 48,451,507,000 40,064,596, % 2 UAP General Insurance 39,084,261,000 38,808,538, % Company 3 AIG Uganda Ltd 12,138,221,000 15,556,485, % 4 Lion Assurance Company 6,712,311,000 11,074,856, % 5 APA Insurance (U) Ltd 6,216,830,000 8,718,674, % 6 ICEA General Insurance Company 11,525,571,000 7,773,635, % 7 Goldstar Insurance Company 7,554,048,572 6,363,542, % 8 Britam Insurance Company 7,973,139,000 4,183,990, % 9 Phoenix of Uganda Ltd 5,227,479,000 3,762,682, % 10 Sanlam General Insurance Ltd 2,612,523,000 3,567,484, % 11 Excel Insurance Company 1,900,856,527 2,885,297, % 12 First Insurance Company Ltd 1,920,028,000 2,463,500, % 13 Statewide Insurance Company 6,786,565,476 2,097,253, % 14 Transafica Assurance Co Ltd 3,375,594,000 1,892,184, % 15 East African Underwriters 1,381,183,000 1,576,884, % 16 NIC General 607,391, ,206, % 17 Pax Insurance Company 710,176, ,123, % 18 Nova Insurance Company 190,476, ,931, % 19 Alliance Africa General Ins Ltd 2,619,160, ,784, % 20 Rio Insurance Company 12,772,250 83,925, % 21 CIC General 215,876,000 15,440, % Total 167,215,968, ,818,011, % Non-life class-wise reinsurance premium ceded ( 000 Ushs) Class Fire 42,546,814 49,976,119 48,871,858 58,344,792 60,121,938 Marine/ 14,496,771 16,380,261 17,904,153 16,722,565 18,758,323 Aviation Motor 8,719,382 11,166,923 10,787,062 9,311,460 8,700,535 Public Liability 6,462,443 9,568,129 4,924,250 6,584,130 6,076,492

54 28 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY Continued... Workers 3,295,744 4,560,374 7,217,153 7,378,571 6,260,527 Compensation Burglary 1,053,763 2,416,539 2,200,110 1,712,209 1,790,419 Engineering 18,662,546 15,980,452 16,422,587 58,131,477 16,653,953 Personal 13,830,353 11,296,127 14,444,625 12,482,367 10,416,179 Accident Bonds 3,361,347 3,619,139 6,392,571 5,519,297 5,891,973 Medical - 13,124,481 15,029,422 2,960 24,711,389 Misc. Accident 28,944,944 14,495,288 18,390,226 40,869,679 25,741,524 Total 141,374, ,583, ,584, ,059, ,123,252 Non-life class-wise net premium income ( 000 Ushs) Class Fire 14,387,396 12,627,058 18,878,448 15,786,366 20,211,279 Marine/ 7,263,524 8,145,393 8,878,003 11,979,916 9,736,880 Aviation Motor 81,332,833 89,491,587 96,676, ,694, ,169,621 Public Liability 3,406,117 3,523,144 3,317,041 3,444,768 4,516,894 Workers 9,878,740 9,640,962 12,257,493 12,627,355 12,987,053 Compensation Burglary 6,346,765 6,533,274 6,610,244 8,269,306 6,909,850 Engineering 4,307,439 3,980,508 5,329,552 4,377,132 4,228,286 Personal 15,816,886 24,002,764 20,447,617 25,049,330 31,340,139 Accident Bonds 2,537,132 3,514,390 3,084,080 2,111,434 3,016,221 Medical - 20,570,129 33,257,226 43,220 37,588,146 Misc. Accident 26,323,166 16,775,965 13,021,175 54,985,340 23,355,295 Total 171,599, ,805, ,756, ,368, ,059,664 Class-wise reinsurance ratios (%) Class Fire Marine/Aviation Motor Public Liability

55 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Workers Compensation Burglary Engineering Personal Accident Bonds Medical Misc. Accident Industry average Retention ratios (%) Class Fire Marine/Aviation Motor Public Liability Workers Compensation Burglary Engineering Personal Accident Bonds Medical Misc. Accident Industry average Net earned premiums ( 000 Ushs) Class Fire 13,432,621 12,657,655 15,463,584 16,835,136 18,469,314 Marine/Aviation 6,959,176 7,737,237 7,962,383 10,400,064 10,771,332 Motor 80,932,630 84,046,683 91,531, ,230, ,512,174 Public Liability 3,189,647 2,877,127 2,798,850 2,971,023 5,234,688 Workers Compensation 9,869,219 9,497,507 9,554,681 12,862,142 13,381,915

56 30 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY Continued... Burglary 6,145,524 5,437,699 5,465,120 8,085,392 7,211,549 Engineering 4,055,758 3,974,179 4,665,236 4,329,175 4,250,356 Personal 14,308,480 22,613,474 21,211,981 22,912,737 28,849,500 Accident Bonds 2,483,109 3,488,038 2,964,034 2,785,539 2,771,738 Medical - 17,109,599 27,995,636 38,129 36,395,896 Misc. Accident 22,778,380 13,688,954 14,005,597 52,977,781 22,585,419 Total 164,154, ,128, ,618, ,427, ,433,881 Net incurred claims ( 000 Ushs) Class Fire 3,845,430 1,270,358 1,751,475 5,004,491 3,075,057 Marine/Aviation 2,214,626 2,901,658 1,006,431 3,260,827 3,227,964 Motor 30,419,014 33,772,310 34,702,770 44,684,177 41,249,181 Public Liability 866,675 2,574 1,822, , ,868 Workers 3,839,555 3,146,222 2,891,494 6,648,991 6,051,898 Compensation Burglary 1,361,519 3,210,106 1,936,436 3,713,676 2,170,464 Engineering 2,733,291 (24,730) 1,120,816 1,502,248 2,286,978 Personal 6,248,614 6,937,503 7,616,306 5,798,660 6,713,430 Accident Bonds 1,248,536 1,466, , ,692 (141,081) Medical - 12,794,537 22,304,883 (3,418) 30,705,973 Misc. Accident 13,376,206 7,453,487 5,301,993 35,119,131 9,424,973 Total 66,153,466 72,930,890 80,925, ,509, ,706,705 Loss ratios (%) Class Fire 28.63% 10.04% 11.33% 29.73% 16.65% Marine/Aviation 31.82% 37.50% 12.64% 31.35% 29.97% Motor 37.59% 40.18% 37.91% 43.29% 38.01% Public Liability 27.17% 0.09% 65.13% 17.83% 17.99% Workers Compensation 38.90% 33.13% 30.26% 51.69% 45.22%

57 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Burglary 22.15% 59.03% 35.43% 45.93% 30.10% Engineering 67.39% -0.62% 24.02% 34.70% 53.81% Personal 43.67% 30.68% 35.91% 25.31% 23.27% Accident Bonds 50.28% 42.05% 15.86% 9.00% -5.09% Medical % 79.67% -8.96% 84.37% Misc. Accident 58.72% 54.45% 37.86% 66.29% 41.73% Industry average 40.30% 39.83% 39.74% 44.86% 40.90% Underwriting results ( 000 Ushs) Class Fire 39,070 2,656,986 5,547,832 4,377,665 3,985,702 Marine/Aviation 941,703 (141,580) 1,923,108 78,928 (685,770) Motor 11,194,221 11,515,428 13,111,314 4,909,790 3,995,812 Public Liability 63, ,069 (100,232) 453,279 1,170,799 Workers 1,821,133 2,115, , ,828 (749,697) Compensation Burglary 2,161, ,917 1,300, , ,754 Engineering (808,960) 159, ,793 (203,286) (739,583) Personal Accident (832,719) 7,442,961 1,408,545 2,960,678 2,508,903 Bonds (1,476,624) (704,191) 218, , ,535 Medical - 1,564,053 (1,050,149) 24,386 5,973,674 Misc. Accident 388,617 (1,645,429) (355,149) (7,852,419) (4,601,658) Total 13,490,512 23,394,673 23,671,457 7,117,910 12,407,471 Underwriting profit % age change 73.42% 1.18% % 74.31% 7.3 Life Insurance Performance Life gross written premium income increased by 32.70% from Ushs 99 billion in 2015 to Ushs 132 billion in Premium ceded on account of life business increased to Ushs 20 billion in 2016 up from Ushs 17 billion in 2015 Life gross claims paid increased to Ushs. 47 billion in 2016 up from Ushs. 25 billion in Net incurred claims on account of life business increased to Ushs 34 billion in 2016 up from Ushs 31 billion in 2015.

58 32 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY Continued... Here below are class-wise summaries of the life performance in 2016 Life Insurance Gross written premium ( 000 Ushs) Class %age change 2015/16 Life Individual 5,753,930 8,745,951 18,167,084 24,428,538 50,152, % Life Group 26,951,749 34,501,557 31,824,378 57,654,942 60,976, % Medical - 4,040,438 12,501,543 5,277,759 7,120, % DAP 6,551,645 8,119,047 11,542,300 12,490,901 14,250, % Total 39,257,324 55,406,993 74,035,305 99,852, ,499, % %age change 13.50% 41.14% 33.62% 34.87% 32.70% Life Insurance Gross claims paid for the year 2016 Name of the Company 2016 Gross claims paid 2015 Gross claims paid Percentage Change(%) 1 Liberty Life Assurance Ltd 22,393,757,000 11,776,760, % 2 Sanlam Life Insurance (U) Ltd 7,870,372,000 5,964,696, % 3 UAP Life Assurance Co 5,372,031,000 2,374,715, % 4 Jubilee life Insurance 3,859,060,000 2,091,415, %

59 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, ICEA Life Assurance Company 7,305,914,000 1,861,139, % 6 Prudential Assurance Uganda Ltd 99,511, ,110, % 7 NIC Life 557,914, ,855, % 8 CIC Life 13,490,000 11,661, % Total 47,472,049,000 25,147,351, % Reinsurance premium ceded ( 000 Ushs) Class %age change 2015/16 Life Individual 119, , ,478 1,587, , % Life Group 5,429,903 8,558,064 5,314,068 15,560,868 20,122, % Medical - 3,424,723 5,151, ,750 - DAP Total 5,549,121 12,173,316 10,845,731 17,147,992 20,932, % %age change 31.66% % % 58.11% Net premium income ( 000 Ushs) Class %age change 2015/16 Life Individual 5,634,712 8,555,422 17,786,606 22,841,414 49,450, % Life Group 21,521,846 25,943,493 26,510,310 42,094,074 40,853, % Medical - 615,715 7,350,358 5,277,759 7,012, % DAP 6,551,645 8,119,047 11,542,300 12,490,901 14,250, % Total 33,708,203 43,233,677 63,189,574 82,704, ,567, % %age change 10.98% 28.26% 46.16% 30.88% 34.90% Reinsurance ratio (%) Class Life Individual 2.07% 2.18% 2.09% 6.50% 1.40% Life Group 20.15% 24.80% 16.70% 26.99% 33.00% Medical % 41.20% 0.00% 1.51% DAP 0.00% 0.00% 0.00% 0.00% 0.00% Industry Average 14.14% 21.97% 14.65% 17.17% 15.80%

60 34 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY Continued... Retention ratio (%) Class Life Individual 97.93% 97.82% 97.91% 93.50% 98.60% Life Group 79.85% 75.20% 83.30% 73.01% 67.00% Medical % 58.80% % 98.49% DAP % % % % % Industry 85.86% 78.03% 85.35% 82.83% 84.20% Average Net Earned premium ( 000 Ushs) Class %age change 2015/16 Life Individual 5,634,712 8,555,422 17,786,606 22,841,414 49,450, % Life Group 21,521,846 25,943,493 26,510,310 42,094,074 40,853, % Medical - 615,715 7,350,358 5,277,759 7,012, % DAP 6,551,645 8,119,047 11,542,300 12,490,901 14,250, % Total 33,708,203 43,233,677 63,189,574 82,704, ,567, % %age change 10.98% 28.26% 46.16% 30.88% 34.90% Net incurred claims ( 000 Ushs) Class %age change 2015/16 Life Individual 701, ,897 5,359,923 3,205,913 5,055, % Life Group 7,358,084 8,799,736 7,068,438 15,754,275 16,880, % Medical ,219 4,107,533 5,350, % DAP 3,685,964 2,845,903 9,009,117 8,331,440 7,328, % Total 11,745,796 12,472,536 21,859,697 31,399,161 34,614, % %age change % 6.19% 75.26% 43.64% 10.24% Loss ratio (%age) Class Life Individual 12.45% 9.67% 30.13% 14.04% 10.22% Life Group 34.19% 33.92% 26.66% 37.43% 41.32% Medical % 77.83% 76.30% DAP 56.26% 35.05% 78.05% 66.70% 51.43% Industry average 34.85% 28.85% 34.59% 37.97% 31.03%

61 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Health Management Organisations Performance The gross written premium income for HMOs grew by 8.25% from Ushs. 48 billion in 2015 to Ushs 52 billion in A summary of the company wise performance is indicated here below: Health Management Organisations Name of the Company 2016 Gross written premium 2015 Gross written premium Percentage Change(%) Market Share 2016(%) 1 AAR Health Services 22,586,147,000 20,452,139, % 43.30% 2 International Air 24,161,189,000 18,802,087, % 46.32% Ambulance 3 Case Medical care 2,840,575,000 3,081,855, % 5.45% 4 Kadic Health - 2,177,596, % 0.00% Foundation 5 International Health - 1,332,257, % 0.00% Network 6 International Medical 1,845,339, ,879, % 3.54% Link 7 St Catherine Clinic 726,019, ,596, % 1.39% 8 Lisa Medical Centre - 385,000, % 0.00% 9 Nakasero Healthcare - 311,705, % 0.00% 10 Intergrated - 211,166, % 0.00% Community Based Initiative Total 52,159,269,966 48,183,282, % % Health Management Organisations Gross claims paid for the year 2016 Name of the Company 2016 Gross claims paid 2015 Gross claims paid Percentage Change (%) 1 International Air Ambulance 20,126,688,000 15,680,435, % 2 AAR Health Services 21,810,237,000 13,833,984, % 3 Case Medical care 2,732,080,000 2,895,050, % 4 International Health Network 5 Kadic Health Foundation - 1,732,414, % - 928,559, % 6 Nakasero Healthcare - 269,230, % 7 International Medical Link 437,288, ,808, % 8 St Catherine Clinic 176,138, ,169, % 9 Lisa Medical Centre 153,004, % Total 45,282,431,944 36,009,655, %

62 36 Insurance Regulatory Authority of Uganda FINANCIAL PERFORMANCE OF THE INDUSTRY Continued Uganda Reinsurance Company Performance During the period under review, the company s non-life reinsurance premium income grew by 15.43% from Ushs. 21 billion in 2015 to Ushs. 24 billion in Non-life retrocessions increased by 9.5% from Ushs. 3.0 billion in 2015 to Ushs. 3.3 billion in the year Non-life business registered an underwriting profit of Ushs. 1.9 billion in the year 2016 Life reinsurance premium income increased to Ushs billion in 2016 up from Ushs billion Here below is a summary of Uganda Re s performance. Non-life business % age change 2015/16 Gross premium 14,438,980 21,118,406 24,377, % Change in Portfolio 5,432,927 30, % Premium Retrocession 9,484,997 3,094,269 3,391, % Net premium 10,386,910 18,054,925 20,986, % Net Earned 6,828,193 14,420,857 19,709, % Premium Net Incurred claims 4,674,110 9,047,237 10,919, % underwriting profit 215,412 (152,503) 1,941, % Life business Gross written premium %age change 2015/16 522, , , % Retrocession 443, , , % Net Premium 78, , , % Net Earned 46, , , % Premium Net Incurred 19,579 93, , % Claims Underwriting profit 45,602 95, , %

63 CHAPTER 8 FINANCIAL POSITION OF THE INDUSTRY Non-Life Financial Position Life Financial Position HMO Financial Position 42

64 38 Insurance Regulatory Authority of Uganda FINANCIAL POSITION OF THE INDUSTRY... Considering the facts that as insurance markets become increasingly sophisticated and people assume more of the responsibility and risk for financial decisions, financially educated individuals are necessary to ensure sufficient levels of investor and consumer protection as well as the smooth functioning, not only of insurance markets, but also of the economy as a whole Non-Life Financial Position Here below is a non-life insurance industry balance sheet for the year 2016: NON-LIFE BUSINESS 2016 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) AS AT 31 ST DECEMBER 2016 ASSETS 2016 Ushs Ushs 000 Property, Plant and Equipments 38,130,933 56,970,886 Intangible Assets 3,643,711 3,214,628 Investment Properties 75,024,099 77,172,462 Available for sale Investments 168,922, ,855,018 Statutory Deposits 11,754,483 10,370,490 Held to Maturity Investments 157,196, ,807,770 Investment in Associates 19,342,328 19,663,089 Deferred Tax Assets 8,318,482 5,924,076 Other Investments 7,501,501 7,680,255 Premium Recievables 135,421, ,515,972 Reinsurance Premiums Receivable 42,422,957 41,839,661 Reinsurers share of Insurance Liabilities 175,716, ,559,469 Group Balances/Related Parties 10,008,771 8,440,487 Other Debtors and Receivables 36,480,832 33,300,700 Cash and Bank Balances 27,283,832 36,069,162 TOTAL ASSETS 917,169, ,384,125 LIABILITIES LESS NON-CURRENT LIABILITIES Shareholders loans - 290,000 Borrowings/ Finance Obligations 5,120,366 4,729,894 Minority Interest - 1,101,655 Defferred taxation 10,331,693 16,196,614

65 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Unearned premium reserve 211,368, ,359,817 Outstanding claim reserve 129,575, ,952,275 Claims Incurred But Not Reported 24,296,177 24,875,688 TOTAL NON-CURRENT LIABILITIES (380,691,939) (398,505,943) LESS CURRENT LIABILITIES Reinsurance premiums payable 60,699,587 60,770,023 Group Balances/Related parties 25,395,243 22,005,749 Provision of tax 1,935,456 1,573,528 Bank Overdraft/Short term Loans 199,017 - Premium payable 27,300,623 14,310,142 Other Creditors and Payables 75,871,297 65,894,459 TOTAL CURRENT LIABILITIES (191,401,223) (164,553,901) TOTAL LIABILITIES (572,093,162) (563,059,844) NET ASSETS 345,075, ,324,281 SHAREHOLDERS FUNDS Paid- up Share Capital 141,819, ,910,250 Share Premium 8,361,754 7,136,395 Retained Earnings 89,047,564 88,393,610 Revaluation Resrves 5,792,346 21,422,409 Contingency Resrves 72,445,331 61,987,436 Capital Reserves 13,579,290 11,502,533 Fair Value Gains 3,447,315 2,961,857 Other Reserves 936, ,233 Proposed Dividends Payable 9,646,254 21,031,558 TOTAL SHAREHOLDERS FUNDS 345,075, ,324,281 Changes in non-life net assets, assets and liabilites Non-life net assets decreased by (0.65)% from Ushs. 347 billion in the year 2015 to Ushs. 345 billion in Non-life total assets increased slightly from Ushs. 910 billion in the year 2015 to Ushs. 917 billion in the year The amounts of property, plant and equipment reduced by (33.07%) from Ushs. 56 billion in 2015 to Ushs 38 billion in Additionally, Cash and bank balances also reduced from Ushs. 36 billion in 2015 to Ushs. 27 billion in Significant increases were noted in held to maturity investments, that is, from Ushs. 127 billion to Ushs. 168 billion, representing a 32.85% increase. Significant reductions were noted in revaluation reserves from Ushs billion in 2015 to Ushs. 5.7 billion in 2016.

66 40 Insurance Regulatory Authority of Uganda FINANCIAL POSITION OF THE INDUSTRY Continued Life Financial Position Here below is the life insurance industry balance sheet for the year 2016: CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) AS AT 31 ST DECEMBER 2016 ASSETS UG SHS 000 UG SHS 000 Property,Plant and Equipments 4,337,175 3,524,574 Intangible Assets 676, ,662 Investment Properties 24,880,000 26,125,000 Available for sale Investments 76,258,258 44,410,294 Investment in Associates 55,881 49,389 Statutory Deposits 3,745,548 2,027,291 Held to Maturity Investments 112,307,374 92,432,196 Deferred Tax Asset 3,221,078 1,735,344 PolicyLoans 2,016,836 1,402,913 Premium Recievables 7,300,818 4,911,241 Group Balances/Related Parties 1,438,636 1,328,235 Reinsurance Premiums Receivable 10,679,208 4,786,475 Reinsurers share of Insurance Liabilities 5,946,857 4,610,922 Other Debtors and Receivables 9,558,889 8,620,631 Cash and Bank Balances 21,162,751 30,254,897 TOTAL ASSETS 283,585, ,207,064 LESS NON-CURRENT LIABILITIES Borrowings/Finance obligations - 18,647,059 Actuarial Life Liabilities Valuation 89,170,207 59,709,881 Deferred taxation 3,072,164 3,410,976 Outstanding claim reserves 6,683,135 3,626,770 Unearned premium reserves 3,417,693 2,256,748 TOTAL NON-CURRENT LIABILITIES (102,343,199) (87,651,434) LESS CURRENT LIABILITIES Reinsurance premium payable 8,455,079 2,099,154 Payables under DAP 57,982,398 48,036,855 Premium payable 1,324,115 8,623,558

67 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, Group balances/related parties 13,658,850 12,603,960 Other Creditors and Payables 13,693,489 5,099,641 Bank Overdrafts/Short term loans 390,867 - Provision for tax 842, ,188 Managed Funds 4,381,413 9,714,375 TOTAL CURRENT LIABILITIES (100,728,274) (86,518,731) TOTAL LIABILITIES (203,071,473) (174,170,165) NET ASSETS 80,514,159 53,036,899 SHAREHOLDERS FUNDS Paid- up Share Capital 47,494,833 41,887,889 Fair Value Reserves 146, ,073 Retained Earnings (10,907,252) (4,276,488) Contingency Resrves 6,295,452 4,677,735 Share Premiums 26,819,588 5,786,108 Capital Reserves (115,425) (642,365) Other Reserves 10,780,132 4,857,947 TOTAL SHAREHOLDERS FUNDS 80,514,159 53,036,899 Changes in Life net assets, assets and liabilites Life net assets increased to Ushs. 80 billion in 2016 up from Ushs. 53 billion in the year Life total assets increased to Ushs. 283 billion in the year 2016 up from Ushs. 227 billion in the year 2015 Significant increases were noted in the share premium from Ushs. 5.7 billion in 2015 to Ushs.26.8 billion in 2016 Reinsurance premium payable increased from Ushs. 2 billion in 2015 to Ushs. 8.4 billion in 2016

68 42 Insurance Regulatory Authority of Uganda FINANCIAL POSITION OF THE INDUSTRY Continued HMO Financial Position Herebelow is a the HMO insurance industry balance sheet for the year 2016: HMOs BUSINESS 2016 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) AS AT 31 ST DECEMBER 2016 ASSETS 2016 UG SHS UG SHS 000 Property,Plant and Equipments 1,081,987 1,196,817 Intangible Assets 121, ,106 Available for sale Investments 2,702,088 7,837,112 Held to Maturity Investments 6,304, ,446 Deferred Tax Asset 1,285,311 1,303,957 Inventory Stocks 20,679 26,449 Group Balances/Related Parties 6,608,594 2,490,290 Trade Receivables 8,512,132 8,276,845 Other Debtors and Receivables 11,134,243 8,175,246 Cash and Bank Balances 3,550,209 2,190,781 TOTAL ASSETS 41,321,100 32,764,049 LIABILITIES LESS NON-CURRENT LIABILITIES Deferred Taxation Long term Liabilities 181,211 1,016,820 Outstanding Claims 3,799, ,704 Incurred but not Reported 532,706 8,056 Unearned premium reserves 24,640,666 17,686,155 TOTAL NON-CURRENT LIABILITIES (29,154,460) (18,936,735) LESS CURRENT LIABILITIES Trade Payables 3,666,716 10,211,226 Group balances/related parties 4,094,167 1,004,052 Other Creditors and Payables 2,501, ,302 Provision for tax 52,633 16,938 Bank Overdraft/Short term Loans 539, ,703 TOTAL CURRENT LIABILITIES (10,854,769) (12,523,221)

69 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, TOTAL LIABILITIES (40,009,229) (31,459,956) NET ASSETS 1,311,871 1,304,093 SHAREHOLDERS FUNDS Paid- up Share Capital 10,388,347 10,568,347 Retained Earnings (16,824,289) (16,343,454) Share Premium 7,071,046 7,071,046 Contingency Reserves 675,677 8,154 Other Reserves 1,090 - TOTAL SHAREHOLDERS FUNDS 1,311,871 1,304,093 Changes in HMO net assets, assets and liabilites HMO net assets increased slightly to Ushs billion in 2016 from Ushs. 1.3 billion in the year 2015 Related party/group balances increased to Ushs. 6.6 billion in 2016 from Ushs. 2.4 billion in Significant increase in held to maturity investments from Ushs billion in 2015 to Ushs. 6.3 billion in 2016.

70 CHAPTER 9 INSURANCE INTERMEDIARIES Insurance Brokers Loss Assessors/Adjusters 45

71 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, INSURANCE INTERMEDIARIES... During the year under review, the gross written premium income collected through the brokerage distribution channel was Ushs billion which accounts for 46% of the insurance industry premium. This implies that brokerage firms continue to play a significant role in acquiring insurance business on behalf of insurers Insurance Brokers During the year under review, the gross written premium income collected through the brokerage distribution channel was Ushs billion which accounts for 46% of the insurance industry premium. This implies that brokerage firms continue to play a significant role in acquiring insurance business on behalf of insurers. Insurance broker s gross commission reduced by 14.88% from Ushs. 39 billion in the year 2015 to Ushs. 33 billion in The industry average operating expenses to total income ratio for brokers increased from 81% in 2015 to % in Profit after tax to total income ratio reduced from 2% during the year 2015 to (11.37%) during the year Details of the performance of the loss assessors are indicated in the detailed statistical tables section herebelow. 9.2 Loss Assessors/Adjusters Loss Assessors/adjusters are involved in pre-insurance asset valuation, Risk Surveys, Loss Assessment, Fraudulent claims investigation amongst others. The revenue generated by the loss assessors/adjusters increased from Ushs. 1.2 billion during the year 2015 to Ushs. 2.7 billion in Details of the performance of the loss assessors are indicated in the detailed statistical tables section herebelow.

72 CHAPTER 10 GLOBAL INSURANCE PERSPECTIVE 47

73 Insurance Regulatory Authority of Uganda ANNUAL INSURANCE MARKET REPORT, GLOBAL INSURANCE PERSPECTIVE... Global life insurance premiums grew by 5.4% on an inflation-adjusted basis, up from 5% growth in 2015, and relative to an estimated 3.1% GDP growth rate of the global economy. In advanced markets, premium growth has slowed to 2% in 2016 from 3.4% in According to the IAIS Global Insurance Market Report 2016 the performance of insurance on a global scale is indicated herebelow: Non-life business Global non-life premium growth was slower in 2016 than in the year before. Global non-life premiums grew by 2.4% in real (inflation-adjusted) terms in 2016, after 3.0% in In advanced economies, premium growth decelerated to 1.7% from 2.5% due to weaker economic growth and a softer pricing environment in commercial insurance. In emerging markets, premium growth was 5.3% in 2016, up slightly from 2015, but slower than the 8% annual average growth between 2000 and Growth in emerging markets is mostly driven by motor insurance, which represents close to 60% of the total non-life market in these markets. Natural catastrophe losses remained below historic average levels in 2013, 2014 and Global insured losses from natural catastrophes for 2016 are estimated to amount to USD 42 billion, compared to USD 37 billion in the year before. This is slightly below the average loss of the previous ten years of insured losses from natural catastrophe events (USD 46 billion). Losses resulting from man-made disasters fell to USD 7 billion from USD 9 billion in The earthquake that struck the Kumamoto prefecture in Japan on 16th April 2016 and its aftershocks resulted in an estimated insured loss of USD 5 billion, the costliest disaster event globally in Hurricane Matthew the first Category 5 Atlantic hurricane since Hurricane Felix in 2007 is currently estimated to be in excess of USD 4 billion in insured losses for the U.S. and the Caribbean. Life insurance business Global life insurance premiums grew by 5.4% on an inflation-adjusted basis, up from 5% growth in 2015, and relative to an estimated 3.1% GDP growth rate of the global economy. In advanced markets, premium growth has slowed to 2% in 2016 from 3.4% in Emerging markets, in particular emerging Asia, were the main drivers of growth for the global life sector. Emerging market premiums for the full-year 2016 are projected to have grown by 20.1%, up from a 13.2% increase in Reinsurance business Market conditions in the reinsurance industry during the year 2016, were marked by fierce competition, excess capacity, modest premium growth, softening rates, low investment yields and industry consolidation. Reinsurance premium growth has remained moderate since the crisis, at about half the pre-crisis average. In 2016, global nonlife reinsurance premiums grew by 1.0% on an inflation-adjusted basis, after 1.4% in Global premiums in traditional life reinsurance grew by 1.5% in real terms in Reinsurance capital stands at peak levels. Since 2008, reinsurance capital (traditional and alternative) has increased by more than 70%, driven mainly by alternative capital. By contrast, the demand for reinsurance is affected by the weakness in the economy, the balance sheet strength of primary insurers, and changes in reinsurance buying habits of large global insurers. Improved risk management and larger balance sheets have enabled many large insurers to buy less reinsurance and also purchase reinsurance on a group-wide and centralised basis.

74 CHAPTER 11 DETAILED STATISTICAL TABLES 48

75