in Uganda uuskanen, CEO R Dr. Olli-Pekka The Overview of the Microinsurance

Transcription

1 The Overview of the Microinsurance in Uganda Dr. Olli-Pekka Ruuskanen, CEO Uganda Insurers Association Expanding Access to Insurance for the poor in East and Southern Africa March 2-4, 2009

2 Focus of the presentation Informal Community, village groups Formal outside Insurance Industry NGO s Sacco s HMO s Formal Insurance Industry i.e. Regulated Insurance Companies

3 Microinsurance Survey 2008 Aims: To ask about insurance companies involvement in the microinsurance market. To estimate the potential size of the lowincome market To hear about the problems which make it difficult to offer microinsurance products.

4 Gross premium USD 70 million Microinsurance USD

5 How many persons were insured in Uganda 2006? Non-Life policies 176,451 Under group policies 231,285 Approximately 400,000 individuals, out of which microinsurance

6 Life insurance volumes 2006 Individual Life USD There are 516 insured Deposits USD There are 529 insured Group Life USD There are 1,181,000 insured. Premium per person USD 2 Is this microinsurance? Probably not.

7 Potential for microinsurance Great variability on estimates. Life insurance: 4.8 million customers Potential premium: USD 20 million Non-life insurance: 3.1 million customers Potential premium: USD 25 million Total low-income market: USD 45 million, 8 million customers

8 Implications If low-income market could be tapped the gross premium for the insurance industry would increase by 63 % Penetration level would be 1 % Average premium: Life shs (USD 4) Non-life shs (USD 8)

9 Number of companies Six companies were offering microinsurance type products in Four should be in the market 2Q/09. Six are planning to introduce products in two years time. In /20 should be in microinsurance.

10 Providers versus non-providers Does not offer microinsurance Offers microinsurance Difference % Premiums shs 4,813,094 10,649, % Staff number % Combined ratio % % Balance Sheet shs 6,022,772,000 13,847,720, % Return to equity % % Renewal ratio % % Foreign ownership class % Number of companies 13 6

11 Results from linear discriminant analysis It is bigger, more capitalized and more profitable companies that currently offer microinsurance Also higher customer satisfaction

12 Problems 1. Consumer ignorance and ability to pay 2. High administration costs 3. Lack of suitable products

13 Consumer ignorance and ability to pay (1) UBOS Household Expenditure Survey 2005/2006 Monthly income shs (USD 95) Monthly expenditure shs (USD 85) USAid survey on rural saving 2006 Average monthly saving 6-12 dollars (potential not actual) Yearly potential premium per household shs USD 33 dollars

14 Costs % of net earned premiums 140% 120% 100% 80% 60% 40% 20% 17% 40% 21% 15% 26% 13% Claims 63% 60% 59% 35% Expenses Commissions 0% All SA general insurance firms SA firms in Uganda size range Uganda Nonlife market Kenyan Nonlife market Olli-Pekka Ruuskanen

15 High administration costs Restrictive distribution legislation 514 agents 153 branches 150 brokers 1 broker or agent for each Ugandans

16 Alternative distribution channels The most interesting were Saccos MFIs Post Offices Retailers Internet No interest Mobile phones Smart Cards

17 Lack of suitable products Risks identified by low income groups in Uganda Corresponding microinsurance product offered in market Number of companies offering such product, February 2008 Illness Health 1 Death Term Life 1 1 Disability Loss of Limbs Personal Accident Policy Property loss Household 2 1 Livestock 2 Risk of loan Credit Life 4 3 Announced new products by new entrants to low income market in next six months

18 Regulation of microinsurance Mandatory provision for low-income people? 2/3 said ok. 12 months to comply Separate microinsurance act or revised insurance act? 17 out 20 wanted to incorporate microinsurance within existing act. Same solvency rules. Informal schemes should be regulated by UIC

19 Conclusion Insurance companies are getting more active Premium from microinsurance still small Potential about USD 45 million Emphasis on regulation