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Insurance brokers: Can they be trusted to deepen insurance uptake?
Minister of State for Planning, Mr Amos Lugoloobi, listening in to the key note address/giving his speech during the 4th Insurance Brokers Association of Uganda (IBAU) Conference held last week in Kampala under the theme: “The Role of Insurance in rebuilding the post-pandemic economy.
What you need to know:
- An insurance broker makes money off commissions from selling insurance to individuals or businesses. Most commissions are between 2% and 8% of premiums, depending on state regulations. Brokers sell all insurance types, including health insurance, homeowner insurance, accident insurance, life insurance, and annuities
- The IBAU Conference is an annual gathering of insurance players convened by the Insurance Brokers Association of Uganda to discuss issues affecting the industry and openly churn out solutions in the interests of the public and insurance sector stakeholders especially the insurance brokers.
A quick survey undertaken by this reporter indicates that insurance is not an entirely unknown concept among small and medium enterprises (SMES) sector players in the country. In fact the only challenge is the evident low level of appreciation of insurance among the SMES. And this gets worse particularly among the SMEs operating informally.
At personal level, insurance companies offer financial protection for consumers; it doesn’t matter whether it’s a vehicle accident, an accidental house fire or an injury or illness at work. Insurance can help manage all these uncertainties by providing much needed financial protection.
If properly organised, insurance sector has the potential of turning accumulated capital into productive investments—the kind that can drive and transform developmental agendas.
Insurance can also enable mitigation of losses, financial stability and promotes trade and commerce activities, all of which can either pave way or results into what industry professionals and analysts alike describe as sustainable economic growth and development.
It is already common in economies such as the U.S for insurance companies to invest premiums, or dollars that are not used to pay claims and other operating expenses through stock, corporate and government bonds, and even real estate mortgages to finance building construction as well as provide other crucial support to economic development projects.
Local industry players may want to pick a leaf from this.
Already, according to the Minister of State for Planning, Mr Amos Lugoloobi, government cannot wait for this and related transformational ideas to take root in the country.
For the sector to accrue the aforementioned kind of dividends each value chain industry players will have to play their rightful role to the fullest, with the insurance brokers perhaps being at the heart of it all.
The case of the brokers…
And this is where all hell break loose!
For starters, the insurance penetration in the country is barely beyond 1 per cent. Depending on how you look at it—this may either be an opportunity waiting to be exploited or an indication of failure by the industry players particularly the insurance brokers whose primary role is to sell all insurance types, including health insurance, homeowner insurance, accident insurance, life insurance, and even annuities.
There is now a call for deeper soul-searching for the industry players, particularly among the brokers fraternity to look deep inside themselves with a view to recalibrate their role and rightful position in the industry.
This call was further amplified at the 4th Insurance Brokers Association of Uganda (IBAU) Conference held last week in Kampala under the theme: “The Role of Insurance in rebuilding the post-pandemic economy.”
Almost in unison, notable speakers at the gathering of minds urged the insurance industry players particularly the brokers to do whatever they can to restore the insurance sub sector trust.
“ …you must provide trust, transparency and product clarity,” the director, IBAU as well as the Conference Convener, Mr Paul Muhame said told the gathering comprised of among others industry players and stakeholders.
The need for trust emanates from either ugly scenarios or perceptions resulting from a raw deal or experiences perpetuated by a broker – many of whom oversell a product beyond its real value.
As a result of this, when the time for payout of claims arises many claimant eventually find themselves settling for much less or even nothing at all upon the realisation that they were taken for a ride in true con artist style.
Speaking at the 4th Insurance Brokers Association of Uganda (IBAU) Annual Conference held on April 7, 2022 at Speke Resort, Munyonyo, the Minister of State for Planning, Mr Amos Lugoloobi who was the chief guest in his remarks asked the insurance industry players comprising of brokers: “Can we trust you?”
He continued: “Fair prices for insurance products, prompt settlement of claims are critical for the industry image and importantly bridging the trust gap.”
The conference key note speaker, Ms Anne Juuko, didn’t mince words either. She said: “I think trust should be added on the balance sheet because once that is gone then there is no business to talk about—it’s over.
She continued: “Trust has taken a new whole dimension and meaning and because of that it should be at the Centre of whatever we do,” Ms Anne Juuko who is also the Chief Executive Officer – Stanbic Bank Uganda, said.
Importantly perhaps, the brokers, following their annual conference, are willing to go back to the drawing board where they will re-emerge stronger and better industry players to drive the sub sector to hitherto unknown levels
The Jury is still out there, though.
