Effect of COVID-19 on performance of non-life insurance companies in Uganda

Abstract

The overall objective of the study was to determine the effect of COVID-19 on the performance of non-life insurance companies in Uganda. The study specifically focused on establishing the relationship between insurance premiums, claims experiences, Insurance policies demanded, COVID-19 restriction and performance of non-life insurance companies. The study investigated the effect of COVID-19 on performance of non-life insurance companies in Uganda by interviewing a sample of selected respondents who are employees in the eight non-life insurance companies. The study explained the summary (descriptive statistics) at the univariate level while chi-square and Logistic Regression were employed at bivariate level and multivariate level respectively. The study exhibits that 35.42% of the respondents and 46.88% of the respondents agreed and strongly agreed respectively that reduced face-to-face contacts, closure of branch offices and non-verbal communication by the obligation to wear a mask have negatively affected insurance sales. It shows that the majority (53.12%) of the respondents and 46.88% of the respondents strongly agreed and agreed respectively that the COVID-19 restrictions affected non-life Marine, Aviation and Transport, Border Insurance and Green Card Insurance. The results of the study indicates that 39.58% of the respondents and 34.38% of the respondents strongly agreed and agreed respectively that due to worldwide lockdown measures, fewer cars and miles are being driven thus decreasing the need for motor insurance. The study postulates that 48.96% of the respondents and 22.92% of the respondents agreed and strongly agreed respectively that the COVID-19 pandemic has led to the creation of new products as well as digitization for the non-life insurance business. The findings of the study revealed that there is a statistically significant and positive relationship between Non-Life Gross Written Premiums and the performance of the non-life insurance companies (p-value= 0.002, coefficient is 1.248) and a statistically significant and negative relationship between Net Claims incurred and performance of non-life insurance business (P-value=0.005<0.05). The study recommended that the non-life insurance companies should sell additional non-life insurance products to current customers in order to increase on the sales revenue, allocate the money received as premiums into profitable investments and financial markets. This would increase the income as well as liquidity health and invest in advertising on radios, televisions, press and the internet to make their products known to the public if they are to increase the demand of their products as well as sales.