Commercial banks to sell insurance products

Bank of Uganda governor Tumusiime Mutebile (C) with Gold Star Insurance Company Ltd staff, managers and directors cut a cake to at the launch. PHOTO BY STEPHEN WANDERA 

By Stephen Wandera

 

Commercial banks will start offering insurance services as soon as Parliament amends the Financial Institutions Act (FIA) 2004.

The legislation will enable commercial banks undertake bancassurance, an idea which is operational in other African countries like Ghana and South Africa.

“The Insurance Act has already been amended to allow for bancassurance but the FIA prohibits it, which is why we are hoping to amend it,” Bank of Uganda governor, Prof Emmanuel Mutebile said at the launch of Goldstar Insurance Company ISO Certification at Kabira Club in Kampala, recently.

Bancassurance involves commercial banks providing outlets through various branches to insurance products, especially life assurance and pension products.

The insurance industry in Uganda continues to occupy a backseat in the financial services sector contributing about Shs550 billion to the economy.

Mr Mutebile said:  “Nevertheless, there are strong grounds for believing that the industry will undergo a profound transformation in the next decade.”

Mr Azim Therani, the managing director of Goldstar Insurance Company said the certification by the International Organisation for Standardization, 9001; 2008, is given to companies that meet the requirements of quality management after undergoing a comprehensive audit of their management standards.

Mr Mutebire said legislation is also being prepared to liberalise the pension sector industry.

“This legislation will impose a mandatory minimum requirement for workers to save money with a licensed fund, but will allow workers the freedom to go to a pension fund of their choice,” Mr Mutebile said.

Goldstar Insurance Company Ltd is a member of the  Ruperelia Group of companies owned by Mr Sudhir Ruperelia.