The insurance sector in Uganda has experienced tremendous growth over the last five years. A recently released report by Financial Sector Depending Uganda, FINSCOPE Uganda 2023, shows an increase in formal insurance uptake since 2018, rising from 1% to 2%
While this process shows a positive trajectory, Uganda still lags in insurance penetration compared to other East African countries. For example, Tanzania boasts a 15% penetration rate, Rwanda 9%, and Kenya 6%. This disparity in penetration has been attributed to factors including a limited range of insurance products, public mistrust, and low awareness among the general public.
For any economy, insurance penetration is influenced by various factors, with regulatory frameworks playing a pivotal role. These frameworks establish an environment that fosters innovation while protecting consumer interests. Often known as a “Regulatory Sandbox,” this controlled experimental space enables businesses and entrepreneurs to test their new solutions without immediate regulatory and supervisory pressures.
Consequently, the environment enables innovators interested in the sector, pilot and test their new technological solution while mitigating any of the risks associated with potential failures and safeguarding solutions.
In 2019, the Insurance Regulatory Authority (IRA) of Uganda developed the “Innovation Action Plan” aimed at doubling insurance penetration in the country. This plan emphasized leveraging innovation and technology integration within the insurance sector. Key to this strategy was the provision of the IRA Regulatory Sandbox to provide flexible regulatory tools that facilitate innovation of digital channels to enable industry players to innovate, test, and scale their solutions that will enhance industry efficiency, customer service delivery and insurance penetration.
Driven by the urgent need to catalyze insurance penetration, the Insurance Regulatory Authority of Uganda partnered with the Innovation Village to design the Insurtech program known as the “IRA InsureX program. This program focuses on leveraging technology-driven innovations to create pathways for digital solutions targeting last-mile users. Through the integration of InsurTech innovators and shared digital infrastructure, tech-enabled talent, market access opportunities, and a connected ecosystem, the program aims to double sector penetration.
In the inaugural cohort of the IRA InsureX program, seven innovators with tech-enabled enterprises have successfully graduated. These include Agro Consortium, Easy Ride, Weetase, Inswallet, Wastepays, InsureYo, and CARE4Me. During the program, these innovators received training on leveraging Shared Infrastructure and Open Platforms to drive innovation within the Insurance Sector. They were also integrated into a connected tech ecosystem that enabled them to experiment with their innovative solutions and products, aiming to enhance efficiency and accessibility of insurance services.
Furthermore, the program exposed them to emerging technologies while ensuring customer protection remains uncompromised.
Following 13 weeks of intensive training on expediting the development of innovative InsurTech solutions and unlocking the demand and supply for insurance innovation, market access, and collaborative ecosystems, these innovators are now prepared to join the Insurance Regulatory Authority of Uganda (IRA) regulatory sandbox.
The IRA Regulatory sandbox will provide a safe environment with minimal regulations to support these innovators build and test market-driven innovation under a relaxed regulatory review and scrutiny. This approach aims to expand innovation and design services to enhance product and solution effectiveness and efficiency. The sandbox will also offer them an opportunity to broaden consumer choices for managing and mitigating risks associated with digital services, ultimately contributing to sustainable technology integration and attracting investments at both the sector and national levels.
The growth of Uganda’s insurance industry hinges on creating a conducive regulatory framework and technological advancements like digital platforms, data analytics, and AI-driven solutions. These innovations enable InsurTech innovators to provide digital solutions that cater to evolving insurance access needs, improve efficiency, and extend coverage to previously untapped communities or sectors.
Furthermore, collaboration among insurance providers, government bodies, and innovators promotes industry growth, product diversification, and inclusive access to insurance tailored to diverse needs. This collaboration contributes to higher insurance penetration rates in the economy.
In a nutshell, the IRA InsureX Program serves as a prime example of how innovation can foster industry growth. Embracing regulatory frameworks allows Uganda’s insurance sector to navigate digital complexities, encourage continuous innovation, and attract investments. This approach creates a vibrant ecosystem crucial for shaping the future of the insurance industry and doubling its penetration by 2025.
The second cohort of the IRA InsureX program is now open for applications! If you’re an innovator with ambitious goals of revolutionizing insurance solutions, seize this opportunity and join us in shaping the future of the industry.
Apply here: https://bit.ly/InsureXProgram to join the program.
