Uganda’s insurance regulator has granted Stanbic Bank a bancassurance license, making Stanbic the first commercial bank in the country to get the license. The Insurance Regulatory Authority (IRA) issued the license following the enactment of the Financial Institutions Amendment Bill 2016 which included 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.
While handing over the license on Wednesday,Kaddunabbi Ibrahim Lubega, the CEO ofInsurance Regulatory Authority of Uganda described the introduction of bancassurance as “one of the most significant recent developments in the financial services sector in Uganda”.
“It will increase access to insurance services amongst Ugandans in different parts of the country through the vast bank branch network,” Kaddunabbi said.
He mentioned that the public places high confidence and trust in banks which then positions them as best sale points for insurance. “Banks are well positioned to attract consumers to purchase insurance products from their distribution outlets. It is through such partnerships that the insurance industry can grow and increase its penetration in Uganda,” he added.
Stanbic Bank Uganda’s CEO Patrick Mweheire who received the license said; “We are extremely proud to be the first Commercial Bank in Uganda to offer Bancassurance. As Stanbic, we have been preparing to launch the service for some time now and have invested significantly in training staff, signing partnerships and putting in place the technology and infrastructure needed to roll out the product smoothly.”
He stated that the new partnership will raise public knowledge and awareness about the various benefits and types of insurance products available through banks.
“We look forward to working with the regulator and other industry players to run effective communications and stakeholder initiatives that will ensure this happens.”
Lydia Kayonde who heads Bancassurance at Stanbic Bank highlighted the benefits of the new service, among them; one stop convenience, savings and variety in choice.
“In addition, the premium prices will be better negotiated and product turnaround times will inevitably improve. Bancassurance is an efficient distribution channel with higher productivity and lower costs to serve than traditional sales channels,” Kayonde said