Finance Trust Bank Uganda has been awarded a bancassurance license to authorize the financial institution to begin offering a range of insurance products. This makes it the eighth commercial bank to get the license from the regulators, Insurance Regulatory Authority and Bank of Uganda.
At a media launch held at Sheraton Kampala on Tuesday, the Finance Trust Bank Managing Director, Annette Mulindwa said that bancassurance was an opportunity to further widen the penetration of insurance services in the country which is yet to be deepened.
“Insurance penetration still remains at a low of 1% while banking is at 30% in the urban areas and 15% in the rural areas. This license is therefore a huge opportunity for insurance to grow their reach,” she said.
She said that with 36 branches spread across Uganda, Finance Trust bank is confindent that the new partnership with insurance providers will insure more Ugandans.
To introduce insurance products, the bank has partnered with Statewide Insurance Company (SWICO), Jubilee Insurance, Liberty, CIC General Insurance, UAP Old Mutual and Sanlam.
“Many Ugandans and our customers suffer risks including calamities and for this reason, they need health, life and motor insurance. So, they will need this new product,” Mulindwa said.
“We have hired resources that are highly technical in insurance, but we shall need to create more awareness”.
She urged the partnering insurance firms to ensure that they uphold the bank’s values and investing more in the collaboration to make it a mutually beneficial venture.
George Steven Okotha, the Director of Operations at Insurance Regulatory Authority (IRA) congratulated Finance Trust upon the new product.
He however stressed the need for the insurers to instill confidence in the clientele through convenient and timely settlement of claims.
“Insurers need to be committed. No bank is going to allow its name to be tarnished because somebody bought a product through the bank but their claims have not been paid,” Okotha noted.
Anthony Githuka from UAP Old Mutual Uganda who are part of the insurers that will be working with Finance Trust remarked that bancassurance will create a one stop point for the already bankable population enabling them access to insurance.
He however urged financial institutions to leverage their technology innovations like mobile banking services to extend insurance products to their customers.
Finance Trust Bank was issued the bancassurance license in December last year, following the enactment of the Financial Institutions Amendment Bill 2016 which includes a provision for Bancassurance and the subsequent approval of the regulatory guidelines by the Bank of Uganda.
The law mandates IRA to receive applications and license financial institutions to conduct Bancassurance business with approval from the Central Bank.
Bancassurance refers to a relationship between a bank and an insurance company in a bid to offer insurance products or insurance benefits to the bank’s customers.
This implies that a bank’s tellers become points of sale and point of contact for the customer. Banks earn additional revenue through commissions by selling the insurance products, while insurance companies are able to expand their customer base with less operational costs.