Four years since Bancassurance was first introduced in Uganda, experts say the concept is gaining ground and soon every bank customer will also have a life insurance cover attached to their account.
The Principal Officer in charge of Bancassurance at Diamond Trust Bank (U) Ltd, Fred Baguma says the future of Bancassurance in Uganda is bright and that every bankable client shall have a life insurance cover in addition to bank account.
“Signing up for this service is done at any of the DTB branches where there is a bancassurance specified officer well equipped to walk you through the product. One would require a valid national identity card and for as less as 152,000 UGX, you are eligible for a life insurance cover with guaranteed maturity benefit of 11,400,000 UGX after five years subject to consistent premium payment.”
Diamond Trust Bank (U) Ltd is one of the banks authorized to carry out bancassurance business in Uganda effective 1st January 2020 having been licensed by the Insurance Regulatory Authority (IRA) Uganda.
The concept of bancassurance was originated in the European countries and spread gradually into other countries Uganda inclusive. The channel alone contributed to 5.57% and 2.23% in 2006-2007 under channel-wise new business performance. Bancassurance, a sector which is still in the maturing stage, is a different channel of insurance. The maturity differs with different regions. The good news, it is expected to grow at a high rate in the coming years.
Bancassurance is a French term referring to the selling of insurance through a bank’s established distribution channels. In other words, we can say Bancassurance is the provision of insurance (assurance) products by a bank. The usage of the word picked up as banks and insurance companies merged and banks sought to provide insurance, especially in markets that have been liberalized recently. In some countries, bancassurance is still largely prohibited, but it was recently legalized in countries like USA when the Glass Steagall Act was repealed after the passage of the Gramm Leach Bililey Act.
Bancassurance primarily rests on the relationship the customer has developed over a period of time with the bank. And pushing risk products through banks is a much more cost-effective affair for an insurance company compared to the agent route, while, for banks, considering the falling interest rates, fee based income coming in at a minimum cost is more than welcome.
In Uganda bancassurance has been accepted and is actually highly encouraged one the bank in question has gotten a license from IRA to conduct bancassurance business. Humans are known for their love for convenience. This service is convenient in the sense that it’s a one stop center for bank customers enabling them to access insurance services. It’s a win for insurance companies because it stimulates the coverage/ consumption of insurance products due to the wider bank branches network.
In this highly technology driven economy, flexible and convenient services are brought closer to consumers and consumer reception is vital lest they will be left behind. Baguma encouraged Ugandans to embrace these services that have been introduced to ease purchase of insurance policies for those that require them. He further added that insurance and its advantages have over the years been echoed and Ugandans have slowly embraced insurance and go ahead to secure policies that will in a way or two safeguard them from different calamities.
Diamond Trust Bank (U) is one of the banks licensed by IRA to conduct Bancassurance business and it has partnered with leading insurers in Uganda like ICEA Life Insurance, Jubilee Life insurance, Jubilee General Insurance Company, MUA Insurance Company, Alliance Africa General Insurance Company.