The impact of banc assurance on the financial performance of the insurance sector: case study: insurance companies that use the bancassurance model In Kampala.

Abstract

With the rise of financial innovation, Bancassurance is the way to go. Bancassurance is the selling of insurance through the bank distribution channel. It provides insurance companies with the opportunity to tap into the client base of banks while promoting customer retention However in Uganda, few studies have been done relating to Bancassurance in its entirety. The objective of the study was to determine the effect of Bancassurance on the financial performance of Insurance Companies in Uganda. Secondary data was collected from the Insurance Regulatory Authority (IRA) then multiple regression and correlation analysis were used in the data analysis. The study revealed that there was strong positive relationship (0.7143) between the financial performance of Insurance companies and bancassurance. On the contrally, the study revealed there was a weak relationship (0.0857) between micro insurance agents’ model and financial performance of Insurance companies in Uganda. This therefore implies that bancassurance model is the most appropriate and recommended marketing model as per the study findings. There is need for a committed top management to show full support in facilitating the adoption and implementation of bancassurance through increased awareness and sensitization campaigns as there is significant relationship between bancassurance and financial performance of Insurance companies. The study recommends that the Insurance Act should be reviewed with a view of formulating more applicable policies rather than generic policies imported from other countries so as to enhance clarity and recognition of this insurance sales channel through the bancassurance in Uganda. The study also therefore concludes by recommending that Uganda’s financial system takes up bancassurance of marketing the insurance products by strengthening the relationship between the banks and insurance companies to achieve mutual growth for both entities since this study reveals the model to be more effective as compared to the counterpart.