Factors associated with bancassurance on the performance of insurance in Uganda

Abstract

The growth and adoption of bancassurance is one of the most significant changes in the marketing and financial services over the past few decades. While it could echo like a complex word, it was coined by simply combining two words bank and insurance. The utilization of Bancassurance services has facilitated operations around the globe. Due to the cross-border listing of companies in Africa, Bancassurance has eased the transaction of policies between the main insurance companies as well as the affiliated companies despite the distance and national restrictions. With the liberalization of the insurance sector and competition tougher than before, companies are increasingly trying to come up with better innovations to stay ahead of their competitors. Low insurance penetration is one of the most notable challenges facing the performance of insurance companies in terms of market share, product diversification among others. Narrowing down the scope of Bancassurance to Ugandan Economy, the financial institutions amendment Act, 2016 provides for the introduction of Bancassurance in Uganda. Bank of Uganda was charged with the formulation of the enabling regulations to guide the smooth operationalization of the law. These regulations have since been approved by the Ministry of Finance and gazetted, meaning Ugandan commercial Banks are now in position to offer Bancassurance to complement their existing bouquets of products. Therefore, the current study sought to analyzed the effect of Bancassurance on the financial performance of the insurance sector in Uganda. The specific objectives of the study were to determine the effect of Bancassurance in fire, motor, travel and liability insurance products on the financial performance of insurance companies in Uganda. Data was analyzed using Stata software version SE 15. Descriptive, correlation and regression analysis were used to identify the relationship between Bancassurance and profitability of the insurance companies the data.