East African insurance industry supervisors push for policy harmonisation to boost penetration

East African insurance industry supervisors push for policy harmonisation to boost penetration

Supervisors of the insurance industry in the East African Community (EAC) member states have pledged to work together towards achieving a one and harmonised regulatory environment to boost market penetration.

Speaking at the 18th East African Insurance Supervisors Association (EAISA) meeting in Uganda, the chairman of the association, Alhaji Kaddunabbi Lubega, CEO of the Uganda Insurance Regulatory Authority, said the Insurance Sector in EA countries faces common challenges and has common characteristics that need common interventions.

“That’s why we as supervisors of the industry come together to discuss and adopt common interventions to tackle these challenges,” he said, adding that these issues include law uptake of insurance policies, a low penetration and the capacity to handle these challenges.

“We started with the technical and legal committee of EAISA who are mandated to ensure they go through various work plans which the executive committee has to consider themselves,” Mr Lubega said, explaining that the association, which was formed in October 2010, exists to maintain and develop a stable insurance industry, penetration and insurance market in the EAC.

He stressed that due to the efforts of the association, every insurance company operating with the EAC is effectively supervised and offers security to the policy holders, adding that “even the movement of goods and services within the community can be covered and is being covered as promised”.

Baghayo Saqware, Commissioner General of the Tanzania Insurance Regulatory Authority (TIRA), said the Association helps to benchmark what is happening within the member states so that it can replicate in member countries.

“This Association is crucial as far as pushing for market penetration and development is concerned. No country can work in isolation in this era. We need to work together to be able to achieve a better world,” Dr Saqware said.

“Our aim is to see harmonisation take place and we are pushing for the EA harmonisation Bill which will include a common licensing requirement which will make undertaking of insurance business easy,” he added.

This, Dr Saqware said, is for the betterment of the community and those interested in the sector.

Tackling environmental, social, and governance issues

The Commissioner for Insurance in Kenya, Godfrey Kiptum, suggested there are a number of issues that the Association needs to harmonise including the laws surrounding environmental, social, and governance (ESG) reporting requirements.

Mr Kiptum explained that ESG initiatives have become a strategic imperative for everybody. “Today we are witnessing a lot of climatic changes and we need to put in place sustainability plans for the environment and our companies.

“We signed the Nairobi Declaration on Sustainable Insurance and we, as Kenya, are forging ways that are focused on meeting these challenges. We are working to ensure we are up to speed in regard to the ESG issue and we are going to issue regulations and guidelines on ESG,” said Mr Kiptum.

He added: “I am in engagements with my team on this aspect and we appreciate that ESG is a very important concept as we all need to preserve ourselves and the next generation.”

Uganda’s slow progress on the NHIS

Explaining why Uganda is slow to adopt the National Health Insurance Scheme (NHIS), Mr Lubega said the Ministry of Health is spearheading the campaign to have the NHIS Bill passed by parliament.

“The 10th Parliament had passed the NHIS Bill, but it was advised that the Bill had some issues to put straight. The President of Uganda sent back the Bill to the Minister of Health and we have had several engagements with the minister and the representatives from the first parliamentary council to fast-track the Bill,” he said.

“We have also had meetings with workers and other stakeholders to ensure that the Bill passed by parliament is thorough and will this time not have the shortfalls like the other one,” he said.

Mr Lubega added: “I had been told that the minister in charge is under instructions to ensure they fast-track the Bill. We are going to have the meeting with the Minister to fast-track the same. It’s already been appreciated that it’s important to have this scheme.”

“Kenya, Rwanda and Tanzania already have a national health insurance scheme running and we have also taken lessons from them already to ensure we are on the same page regarding the same,” he said.

Appetite for innovation in the industry.

Commenting on the supervisor’s appetite for supporting innovations within the industry, Dilme Drimas Niyonizeye, director of insurance and pension supervision at the National Bank of Rwanda (NBR), noted during the meeting that the degree of innovation is at a low pace compared to other sectors like banking.

However, he said: “We have seen that the pace is taking shape. The role of the regulator in promoting innovation is proving an enabling environment to the industry. In Rwanda we have sand-box regulations to ensure innovators get the chance to test their products before launching them to the public. So, a conducive environment is the first enabler of innovations in the industry and this is pushing players to be more innovative,” he said.

“On the whole, stakeholders in the industry are becoming more innovative. For instance, motor third party companies are now offering digital certificates, and in terms of claims processing, it’s being done online by most underwriters so that complaints are logged online and this is not a mini-improvement,” he said.

“In terms of products development, more products for more products for low-income earners are coming in the microinsurance framework to cater for people that have been in the past excluded from taking advantage of the opportunities in insurance,” he added.

“However, we need to do more research on the market needs and come up with more products that cater for the low-income segment,” he said.

Penetration levels

The global average for insurance penetration is about 7%. However, regional members are far below this, with Kenya leading with about 3% and Uganda coming last at 0.77% according to 2019 IRA data. Uganda has about 30 insurance companies, non-life and life combined. Kenya has about 55.

Although Kenya has more insurance companies, Mr Lubega said that what matters in not the numbers but that the players there are doing a good job. He added: “Uganda has some of the best in terms of quality of the players in the sector. We have attracted the best underwriters and they are saying that this industry is profitable and Uganda is the most profitable in the EAC region. We may not have the numbers, but we have the quality. However, as supervisors we are going to increase capital requirement to sieve out the weak ones from the market.”

Achievements of EAISA

Since the inception of the Association, Mr Lubega said the body has made a number of changes.

“We have carried out a peer review exercise with the EAC partner states to ensure that there is compliance with the insurance core principles as defined by the insurance association. We have formulated a group-wide and cross-border manual together with the associated annexures to ensure that the companies in the insurance industry are properly supervised.”

The other landmark change is the formulation of the EAC regulation policy. “We also carried out a legal and regulatory peer review to ensure that all our countries are moving at the same pace in regard to what is required for a safe and self-sufficient supervision of all the players in the industry,” Mr Lubega said.

“We are focused toward the enhancement of capacity in the industry through capacity building and we have developed several policy manuals and standards that have helped in the guiding and the co-operation and co-ordination of supervision of the industry within the EAC.”

Finally, the member states have participated in creating a framework for a proposed East Africa Insurance bill that is before the regional parliament.

The chairman of the board of the Insurance Regulatory Authority in Kenya, Hon. Mwambu Mabogah, said the industry’s objective is to become one family as far as insurance policies and laws is concerned.

“We want to ensure that we close the gaps in the industry so that we are able to boost growth through increase market penetration,” he said. “What we need to do is create more awareness so that people understand that insurance is an investment. People need to know that if they have no insurance, they are a liability in the economy.”


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