Martin Owiny
The traditional life insurance product where one pays a premium to an insurance company to provide life cover in event of a dreaded event such as death or disability is something Ugandans have been putting on the shelf for the past three decades.
However, this week Liberty Life Assurance Uganda Limited led a revived initiative to reintroduce the product to the Ugandan market.
Ugandans have become accustomed to keeping wealth for the next generation in either land, buildings or animals. Due to bad experiences with currency reforms, fears of inflation and tradition many Ugandans prefer such avenues for wealth retention as opposed to a traditional insurance product.
This is changing and we are now seeing a number of corporate organisations coming forward to buy life insurance for their employees’ security, well being and future estates. Individuals are also coming forward.
Life insurance makes sense from a diversification perspective. As the Bible says “A good man leaves an inheritance for his children’s children”.
Therefore, as one sets up land and buildings, bearing in mind that the ultimate beneficiary is actually the next generation, it has also become vital that one considers a diversification strategy and also looks at different alternatives, including life insurance.
Life insurance has been designed to ensure that after a given company has put down a fixed annual premium, in the event of the demise of a staff member, the estate of the staff member receives at least 24 months salary as a soft landing.
Such funds can be utilised to cater for children’s education and day-to-day upkeep. It can also be utilised to acquire land or set up a building or business.
Life insurance has become a motivating factor for employees’ to remain within an institution long term. Further to that, it has also become a bargaining tool for employees who seek to move from one organisation to another.
Therefore a number of Ugandan institutions and individuals now view life insurance as a necessity. The challenge is now to make the product easily available to the average Ugandan who is not employed by a corporate institution.
As a diversification strategy to ensure wealth retention and sustenance for the next generation in event of a dreaded disease, injury or disability the insurance industry needs to be structured for the average Ugandan. The challenge is for the country’s insurance industry to rise to the occasion.
Pension funds are now also looking to life insurance as a necessity for their members. This is good news for Ugandans because it acts as a top-up to one’s pension. Therefore in the event of a dreaded event an individual and/or their estate will receive a top-up on their pension savings.
Liberty Life therefore continues to roll out strategies to ensure that life insurance is a reality in the Ugandan market and is partnering with Stanbic Investments to roll out its Libwealth strategy in Uganda.
At the moment the Ugandan Libwealth strategy ensures that in addition to life insurance improved pension fund management and health insurance also becomes a reality to the average Ugandan worker.
Improved pension fund management will be discussed, debated and encouraged through forums such as the Stanbic Business Club which was also launched this week. The Stanbic Business Club was launched on July 10 by Bernard Katompa, CEO of Liberty Africa.
It seeks to bring together pension fund trustees from over 50 pension schemes in Uganda to interact together on topical issues and exchange ideas towards improved pension fund management in Uganda as we transition into a new dispensation of pension reform.
Such interaction has become increasingly important given that a number of organisations have moved ahead of pending legislation to introduce international best practice in management of their pension schemes.
The forum on July 10, possibly for the first time in Uganda’s history, therefore brought together over 40 pensions fund organisations and leading pension industry players to interact together on a formal and informal basis to exchange ideas towards improving Uganda’s pension industry.
As the Chinese say “a journey of a thousand miles begins with one step”.
It is indeed hoped that the promised introduction of a pension industry regulator by December 2008 will lead to increased activity within the Ugandan economy and stock markets. Much as Uganda still has a long way to go, such a regulator will be in a position to provide insight and direction.
Members of pension funds are calling for improved returns as well as reduced bureaucracy in obtaining their hard earned savings when the time comes.
Regulation should therefore go a long way in ensuring that this improvement becomes a reality for the average Ugandan worker who understands that improved governance is the way to go.
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