Ugandan insurers target traders to grow market

Ugandan insurers have urged businesses to take up covers as a defensive measure against losses and hedge against possible risks.

Speaking in Kampala, Mr Mathew Koech, the acting chairman of Uganda Insurers Association, also urged the general public to insure themselves against calamities that have led to the destruction of many businesses and loss of lives.

Markets such as Kisekka, Park Yard and Kisenyi have in the past few months been destroyed by fire, causing losses estimated at millions of shillings.

Other incidents that the country has witnessed where damage could have been minimised if property and businesses had been insured include the Bududa, Kabale and Kisoro landslides, the September 2009 Buganda riots and the Eastern Uganda and Kampala floods that led to destruction of property, displacement of people and famine among others.

Insurance transfers financial losses by disasters like fire and accidents among others to an insurance service provider upon payment of premiums.

The insurer then compensates the person when a loss occurs.

Mr Koech said disasters can strike anytime and advised market vendors to form associations, which they can use to insure their businesses.

“Insurance softens the ground for a soft landing of any calamity when it occurs and avoids such incidents of financial impact. The cost of insurance is affordable. Some businesses operate on borrowed capital and in such a calamity, the insurer takes on the responsibility of compensating them,” he added.

He also cautioned people with buildings and businesses in wetlands, saying it was a disaster in waiting, given the increasing heavy rains in the country.

Despite its enormous benefits, insurance penetration in Uganda is at a low of 0.6 per cent and the sector’s contribution to the country’s Gross Domestic Product is 1 per cent.

Mr Koech attributed the low penetration to inadequate education to create public awareness and appreciation of the dynamics of the industry due to the association’s budgetary constraints.

He was, however, optimistic that the industry is set for robust growth in the coming years.