The factors affecting the uptake of Insurance in the informal sector in Uganda

Abstract

The study was set out to examine the factors for the insurance uptake in the informal sector in Uganda. The study employed a causal study design. Since there is need for realism in the data to be collected and the interest of the researcher to further observe the emotions and physical body language of the respondents while responding to the research questions, primary data was collections was preferred and thus employed. This data was targeted to be obtained from people in the informal sector in Uganda (population used) and a sample of 400 respondents were used from Mpelerwe which was the case study. Data was collected using through direct interview between the researcher and the respondent hence made the use of a questionnaire. The study covered from 2017 to 2022. The study used binary logistic regression analysis to examine the factors for the insurance uptake in the informal sector in Uganda. Forecasting model was developed and tested for accuracy in obtaining predictions. From the study it was established that insurance in Uganda transact two types of insurance businesses namely informal insurance and formal insurance. Insurance penetration ratio increased by 18.52% in 2021. The life insurance part increased by32.13 % from UG183.72 billion to UGX 242.74 billion in 2022 and general (non-life) insurance accounted for 3.95% from UGX390.93 billion in 2021 to UGX406.37 billion in 2022. Gross written premiums (GWP) amounted to UGX 423.53 billion in the year 2017. Enacting a modern legal framework and designating a special judicial authority to handle insurance- related cases are key requirements to enable market development by protecting the rights of policyholders and regulating the activities of market participants. Also fostering a competitive environment drives innovation, competitive pricing, and the adoption of best practices and is a key enabler for the development and growth of insurance markets