The Insurance Industry in the year 2015: Achievements, Challenges and Agenda for 2016 – The Regulator’s Perspective

SCOPE 1. Setting the Agenda - Macro-economic perspective 2. Industry Achievements Capacity and Growth Regulatory developments Supervision and Compliance 3. Agenda for Conclusion/way forward

While Uganda’s economy remains fundamentally sound, some economic conditions pause significant challenges. The recent economic shocks especially exchange rate depreciation and the resultant inflationary pressures, higher interest rates, subdued fixed investment and weaker consumer spending will ultimately impact on the overall level of economic growth (and ofcourse, Insurance business)

Whereas inflation has remained within the single digit target, it has risen steadily from 1.3% in January 2015 to 8.8% in October 2015 mainly on account of increases in food crop prices and the impact of the depreciation of the Shilling on prices of other goods and services. The outlook suggests that inflationary pressures will persist in the next few months, mainly reflecting the effect of the exchange rate-pass-through. However, Bank of Uganda will continue to tighten monetary policy in order to stem these inflationary tendencies. As BOU tightens the monetary policy, stimulation of production and productivity, value addition and export promotion will be required to stem these inflationary tendencies. Companies have remained very resilient despite the challenges..

2014: QTRS 1–3 G.W.P: Bn N.P: 160.3Bn Net Incurred Claims:53.5Bn 2015: QTRS 1–3 G.W.P: 425.3Bn N.P: 253.7Bn Net Incurred Claims:96.7Bn 1)% ▲G.W.P = 46 2)% ▲N.P = 58 3)% ▲N.I.C = 81

Emergence of new players through M&As (Old Mutual, Prudential, Sanlam General….) what does it mean?? Demonstrated interest in Microinsurance – sooner than later, we shall have companies licensed as specialist Micro insurers. More Re-insurers establishing presence in Uganda.. Increased knowledge about insurance – concerted efforts, though some companies have evidently done much more than others for which they deserve applaud. Changing perception about insurance and increased acknowledgement about its role in development – increased requests for technical support from Government MDAs as well as NGOs The establishment of the Department of Financial Services in the MoFPED – policy lobby platform. Increased enthusiasm as Banks prepare to benefit from Bancassurance

Advanced the process of overhauling the Insurance Act (in line with the IAIS ICPs… to take care of issues of corporate governance, risk management, AML..) Advanced the process of overhauling the MTPL Act to revise limits based on an actuarial model, as well as enhance the scope of cover. Microinsurance regulations to cater for the mass market/draft is in place pending legislative approvals. Risk Based Supervision – We rolled out CARAMELS approach of Supervision on some companies and will spread it to others as a step towards RBS.

Rolled out an on-line platform for licensing of insurance Agents - a few challenges Enhanced complaints redress ( increased volume of complaints; resolved over 70/156 complaints reported; noted trend of fraud esp. in Motor, Marine & Medical – need for cautious move; some players are reluctant to cooperate; some complaints are trivial … could be resolved at the respective companies customer care/complaints desks) Improved compliance to established laws and regulations (e.g. improved timeliness of submissions, reduced cases of violations…) Innovations in products as well as technology (noted a shift towards Microinsurance as companies take advantage of technological advancements – mobile platforms) Just concluded a study on informal insurance in Uganda – It gives important demand side insights (findings to be shared in the first quarter of 2016)

Improved partnerships with Development Partners – IMF & WB Supported arrangements to forming an industrial pool to handle the Oil and Gas risks – we have received commitments to have it running early 2016 (this is long overdue, it must be fast-tracked) Agricultural Insurance (Together with market participants, we are pushing for a PPP arrangement with regard to Agriculture) Public Awareness (Radio Talk/ TV live shows, News paper publications, literacy campaigns in training institutions, awareness campaigns with market vendors and other SMEs, participation in trade shows and investors’ foras..etc) Improved working relationships with other Authorities (FIA, URBRA, CMA, BOU, PPDA, …) as well as other MDAs

On an international front, we've continued to participate in regional and international forums to benchmark best practices (EAC Insurance policy - Pass-porting system (one license), EAC Oil & Gas pool, setting up a Financial Services Commission ……etc)

Failure of players to adhere to agreed positions (sharing information on fraud amongst yourselves, and with the regulator, failure to report unhealthy market conduct, brokers clearance.…) Market conduct issues (Undercutting; premium remittance; claims settlement…..) Reluctance of some players to cooperate on issues pertaining to complaints/claims Increased cases of insurance fraud (both policy & Claims) Compliance gaps (timeliness in submissions, data quality/legitimacy) Tax regime Awareness deficit Trust issues

Getting government to insure its key assets and properties Challenges associated with enforcement of Workers Compensation Insurance, Marine insurance and MTP (liability) insurance Macroeconomic challenges (Volatile Forex market, high lending rates, subdued consumption and dampening export and real estate sector....)

Investment in infrastructural projects and Governments commitment to ensuring local content An operational oil and Gas pool tapping into the emerging opportunities Strong good will of Government to support Agricultural Insurance Strong will to support mechanisms for enforcement of the said laws Peaceful elections and the associated after-effects (strong growth)

Pursuing the draft legal frameworks through the requisite legislative processes Enhancing internal as well as Industry capacity to effectively move to RBS Developing mechanisms to improve enforcement of existing insurance laws Supporting market development and market development initiatives Research into consumer and related market conduct issues Developing mechanisms to provide facilitative regulation (through among other things, taking advantage of technological advancements). Instilling market discipline

Not tolerate non-compliance - Act, Regulations, Guidelines (no tolerance for customer detriment; more credible deterrence) Continue to Strictly monitor compliance with established standards with regard to Premium remittances and commission payments, Claims settlement, dispute resolution..etc CONTINUE WORKING WITH YOU INDIVIDUALLY AND COLLECTIVELY FOR THE BETTERMENT OF THE INDUSTRY!!!!!!!!!

Thank you