IRA Advocates for Insurance Mergers to Bolster Local Capacity

The Insurance Regulatory Authority (IRA) of Uganda is championing a wave of mergers and acquisitions within the local insurance market, driven by the conviction that “small is weak, and scale is strong.” This strategic push is designed to forge a more robust insurance sector, better equipped to underwrite the substantial risks associated with Uganda’s developing oil and gas industry.

According to IRA officials, retaining a greater proportion of these high-value risks domestically is crucial for the nation’s economic growth. Currently, a significant portion of the insurance cover for major projects, especially in the extractive industries, is placed with international reinsurers, leading to substantial capital outflow.

By consolidating, local insurers can accumulate the necessary capital and expertise to underwrite larger policies. This not only strengthens the financial standing of individual companies but also enhances the overall capacity and competitiveness of the Ugandan insurance market on a regional and global scale. The IRA believes that larger entities will be better positioned to invest in technology, talent, and risk management, thereby improving service delivery and product innovation.

The authority’s stance underscores a broader economic objective: to foster self-sufficiency and maximize the local benefits derived from Uganda’s natural resources and expanding economy. Mergers are viewed as a vital tool to achieve this, transforming a fragmented market into a consolidated force capable of meeting the demands of a growing economy.

Source: https://www.monitor.co.ug/uganda/business/insurance/small-is-weak-scale-is-strong-why-ira-continues-to-push-for-mergers-5604822