MAKERERE UNIVERSITY

UNDERSTANDING AND UPTAKE OF INSURANCE POLICY OWNERSHIP AMONG

MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMES) IN KAMPALA.

BY

GROUP 3

RECESS REPORT SUBMITTED TO THE SCHOOL OF STATISTICS AND PLANNING

IN PARTIAL FULFILLMENT IN THE REQUIREMEMNTS FOR THE AWARD OF A

DEGREE OF BACHELOR OF SCIENCE IN ACTUARIAL SCIENCE AND BACHELOR

OF STATISTICS MAKERERE UNIVERSITY.

JUNE 2024.
Table of Contents
Background..................................................................................................................................................3
2.0 Methodology.........................................................................................................................................3
2.1 Location where the study was undertaken........................................................................................3
2.2 Number of respondents.....................................................................................................................3
2.3 Data Analysis Techniques..................................................................................................................4
3.0 Results...................................................................................................................................................4
Table 3.1: Background characteristics of respondents............................................................................4
3.2 Knowledge.........................................................................................................................................5
3.3 Attitude..............................................................................................................................................5
3.4 Practice..............................................................................................................................................5
Conclusions..................................................................................................................................................5
Recommendations.......................................................................................................................................6
Reference....................................................................................................................................................6
Annexes.......................................................................................................................................................6
Annex 1: Group Members.......................................................................................................................6
Annex 2: Data Collection tool..................................................................................................................7
Annex 3: Kobocollect excel file................................................................................................................9

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 Understanding and Uptake of Insurance Policy Ownership among Micro, Small, and
Medium Enterprises (MSMEs) in Kampala

Background
Small businesses are vital to economic development. The International Labour Organization (ILO)
confirms that small businesses are “a major job creation engine”, accounting for two thirds of all jobs and
creating the majority of new jobs. Small businesses are particularly important in emerging markets, which
have around 80-95 percent of the world´s estimated 420 to 510 million micro, small and medium
enterprises (ILO, 2016)

Insurance for small businesses represents a promising market for insurers. Nonetheless, it poses three
significant challenges. The first is product design – many insurers do not sufficiently understand small
businesses and their risks, and do not offer them suitable and valuable products. Secondly, once a product
is designed, insurers face challenges in finding an appropriate distribution strategy to get it into the hands
of their clients. Since small businesses are heterogeneous and only loosely grouped, it is difficult to find
aggregators. Finally, insurers face limited demand and poor understanding and trust of insurance among
small businesses.

Cultural factors may also impact insurance uptake, as some SME owners may rely on informal networks
or traditional risk-sharing mechanisms within their communities instead of formal insurance solutions.

Additionally, the affordability of insurance premiums is a critical concern for MSMEs operating on tight
budgets. They may prioritize immediate business needs over long-term risk protection, especially if they
perceive the probability of encountering insurable risks as low.

Furthermore, regulatory barriers and bureaucratic processes can hinder MSMEs from easily obtaining
insurance coverage. Simplifying administrative procedures and creating tailored insurance products that
meet the specific needs of MSMEs could encourage greater uptake.

Overall, addressing these challenges requires a multi-stakeholder approach involving insurance providers,
government agencies, industry associations, and MSME support organizations to enhance awareness,
accessibility, and affordability of insurance options for businesses in Kampala.

2.0 Methodology

2.1 Location where the study was undertaken

In the recent survey conducted to assess the understanding of Insurance policy ownership among
Micro, Small and Medium Enterprises (MSMEs) in Kampala, interviews were carried out in
various strategic locations to ensure a comprehensive understanding of the diverse perspectives.
Such places include; Kasubi, Kikoni, Kawaala and Wandegeya.

2.2 Number of respondents.

A total of 428 respondents participated in the survey, providing a comprehensive overview of
diverse perspectives. The breakdown of respondents is as follows: Kasubi: 110, Kikoni: 114,
Kawaala: 85 and Wandegeya: 107.

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2.3 Data Analysis Techniques
Data was analyzed using univariate analysis using statistical software like STATA and Microsoft
EXCEL. Descriptive statistics, tables and pie charts were used.

3.0 Results.
Table 3.1: Background characteristics of respondents
Characteristics Percentage Number of Respondents
Age Categories(years)
18-24 22.9 98
25-59 76.4 327
60+ 0.7 3
Sex
Male 54.67 234
Female 45.33 194
Highest Level of Education
None 2.1 9
Other 2.8 12
Primary Education 5.37 23
Secondary Education 40.19 172
Tertiary Education, Diploma/Degree 49.53 212
Marital Status
Single 54.91 235
Married 42.76 183
Divorced 1.87 8
Widowed 0.47 2
Respondent’s Secondary Occupation
None 44.4 190
Agriculture 21.5 92
Manufacturing 2.1 9
Trading 15.19 65
Service provision 10.05 43
Other 6.78 29
Respondent’s Average Monthly Expenditure
(UGX) 46.5 199
<0.5M 27.1 116
0.5-<1M 23.6 101
1-5M 2.8 12
5M+
Level of Involvement in Running the Business
Owner 42.06 180
Manager 20.33 87
Employee 37.62 161
Length of Time(years) Running Business
1< year 2.57 11
1-4 years 42.06 180
5+ years 55.4 237

3.2 Knowledge
A table and a pie chart showing the level of knowledge about insurance in percentage

Responses number Percentages (%)

No 57 13.32
4
Yes 371 86.68
Total 428 100
3.3 Attitude
A table showing the attitude of individuals towards insurance policies

Responses towards benefits of The data shows the extent to which

insurance policies to the individuals acknowledged the benefits of
business number percentage insurance policies towards their business.
Yes 250 68% This indicates that more 130 responses
No 120 32% believed that insurance policies were
total 370 beneficial to their businesses which is
represented by the 68% out of a sample of 370 responses. The rest of the individuals did not see any ray
of benefit from the insurance policies.

3.4 Practice
PRACTICE NUMBER OF RESPONDETS PERCENTAGE
Have you ever purchased an insurance No – 294 79.25
policy? Yes – 77 20.75

How often do you review your Annually+ - 28 36.36

insurance coverage? Monthly – 31 40.26
Never –7 9.09
Quarterly – 11 14.29
Have you ever filed an insurance No – 48 62.34
claim? Yes – 29 37.66

Conclusions
1) The research revealed that lack of insurance products among MSMEs is due to high cost,
lack of trust in insurance companies and perceived high level of bureaucracy were the
main factors limiting people to undertake insurance policies.
2) Low claim rates and successful claim benefit.
3) Majority of respondents believed that insurance companies are useful and needed in their
business though they rarely purchase them.
4) Fire and health insurance are the most popular types of insurance among MSMEs.

Recommendations
1. Insurance companies should design and simplify insurance products (cheaper policies) to
ease accessibility and affordability to the MSMEs.
2. Affordability: Insurance companies should develop more affordable insurance products
tailored to MSMEs' needs and budgets.
3. Build trust: Insurance companies should prioritize trust build with MSMEs through
transparent communication, reliable services, and timely claims settlement.
4. Raise awareness about claims process.
5. improvement in government policies through offer incentives, such as tax breaks or
subsidies.

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 6. Insurance literacy programs and sensitization to the MSMEs owners. Through
implementing these recommendations, MSMEs can better understand and access
insurance, protecting their businesses and driving growth through risk assessment

Reference
ILO, I. L. O. (2016). Impact Insurance Working Paper #43: Insurance for small businesses |

International Labour Organization. https://www.ilo.org/publications/impact-insurance-

working-paper-43-insurance-small-businesses

Annexes.
Annex 1: Group Members.
S/N STUDENT NAME REGISTRATION STUDENT COURSE
NUMBER NUMBER
1. MUHWEZI JESPER 23/U/11741/PS 2300711741 BSAS
2. BUSINGYE DEBORAH 23/U/24631/PS 2300724631 BSAS
3. NAKANDI PATRICIA 20/U/2525/PS 2000702525 BSAS
4. NAMIRIMU CATHERINE 23/U/14608/PS 2300714608 BSAS
5. MASOLO TERRY 21/U/12905/PS 2100712905 BSAS
6. LUBANGAKENE EMMANUEL 23/U/ 10714/PS 2300710714 BSAS
7. AKANKUNDA VIOLAH PRINCESS 23/U/05577/PS 2300705577 BSAS
8. NAKAWEESI REBECCA 21/U/11636/PS 2100711636 BSAS
9. NANNONO DAPHINE JANET 23/U/15153/PS 2300715153 BSAS
10. ASCENSION RITAH 23/U/06548/PS 2300706548 BSAS
11. MATSIKO ABRAHAM 23/U/25817/EXT 2300725817 BSAS
12. AMPUMUZA BRIAN 23/06090/PS 2300706090 BSAS
13. ATUHAIRE ESTHER 23/U/06851/PS 2300706851 BSAS
14. MWESIGWA EMMANUEL 23/U/12549/PS 2300712549 BSAS
15. AGABA GLORIA 20/U/2466/PS 2000702466 BSAS
16. MASAJJAGE JOSEPH 23/U/24138/PS 2300724138 BSAS
17. RUKUNDO NINAH 20/U/2487/PS 2000702487 BSAS
18. KOJOKI DORCUS LAGU 21/U/06397/PS 2100706397 BSTAT
19. NAMUJJU LYDIA 23/U/14787/PS 2300714787 BSAS
20. KALUUBI BENJAMIN OWEN 19/U/19696/PS 1900719626 BSAS

Annex 2: Data Collection tool.

Survey Questionnaire
Understanding and Uptake of Insurance Policy Ownership among Micro, Small, and Medium
Enterprises (MSMEs) in Kampala
Introduction
Good morning Sir/Madam. My name is …… a student from Makerere University, School of Statistics
and Planning. We undertaking a study aimed at understanding the challenges faced by MSMEs in
purchasing insurance policies in Kampala, Uganda, as well as their understanding and utilization of
insurance policy. The information obtained from this study will be used to develop strategies that will

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promote the uptake of insurance policies among MSMEs in peri-urban areas of Kampala. Your
participation is voluntary, and all information collected will be kept confidential.
Do you consent to participate in the interview?
[1] Yes (Go to part 1)
[2] No (Thank you for your time)
Part 1: Demographic Information
1.1 What is your age? ___in complete years
1.2 What is the sex of the respondent?
[1] Male
[2] Female
1.3 What is your highest level of education?
[1] None
[2] Primary education
[3] Secondary education
[4] Tertiary education [Diploma/Degree]
[5] Other (please specify)____________
1.4 What is your marital status?
[1] Single
[2] Married
[3] Divorced
[4] Widowed
1.5 Besides attending to the business, what is your secondary occupation? (Tick all that apply)
[1] None
[2] Agriculture
[3] Manufacturing
[4] Trading
[5] Service provision
[6] Other (please specify)____________
1.6 What is your average monthly expenditure in UGX?
1.7 What is your level of involvement in running the business?
[1] Owner
[2] Manager
[3] Employee
1.8 How long have you been running your business in complete years………….?
Part 2: Knowledge
2.1 Have you ever heard about an insurance policy?
[1] Yes
[2] No …………..END INTERVIEW

2.1.a If yes to 2.1, please rate your understanding of insurance policies on a scale of 1 to 5, with 1 being
very low understanding and 5 being very high understanding.
1- Very low 2-Low 3-Nuetral 4-High understanding 5-Very high understanding
Part 3: Attitude
3.1 Do you believe insurance policies are beneficial for businesses like yours?
[1] Yes
[2] No
3.1.If yes to 3.1, why do you believe insurance policies are beneficial. (Check all that apply)
[1] Financial protection and peace of mind in case of unexpected events.
[2] Mitigate risks and uncertainties for the business.
[3] Cover liabilities and legal expenses.
[4] Enhance credibility and trustworthiness.
[5] Access to specialized services and resources.
[6] others specify

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3.1.b If no to 3.1, please explain why you do not believe insurance policies are beneficial (Check all that
apply)
[1] Costly and insufficient value for my business.
[2] No significant losses or risks experienced.
[3] Confidence in handling risks without insurance.
[4] Lack of trust in insurance companies.
[5] Perceived unnecessary complexity and bureaucracy.
[6] others specify
Part 4: Practice
4.1 Have you ever purchased any insurance policy for business?
[1] Yes
[2] No
4.2.a If yes to 4.1, what type(s) of insurance policy have you purchased? (Check all that apply)
[1] Fire insurance
[2] Theft insurance
[3] Health insurance
[4] Life insurance
[5] Other (please specify)____________
4.3 If yes to 4.2, what factors influenced your decision to purchase the insurance policy? (Check all that
apply)
[1] Affordability
[2] Trustworthiness of the insurance company
[3] Coverage of the policy
[4] Flexibility of the policy
[5] Other (please specify)____________
4.4 If no to 4.3, what would be the main reason for not purchasing an insurance policy? (Check all that
apply)
[1] None, I would not
[2] Protection against loss/damage
[3] Legal requirement
[4] Access to credit
[5] Other (please specify)____________
4.5 How often do you review your insurance coverage?
[1] Never
[2] Monthly
[3] quarterly
[4] Annualy+
4.6 Have you ever filed an insurance claim?
[1] Yes
[2] No
4.7 If yes to 4.6, please rate your satisfaction with the insurance claim process on a scale of 1 to 5, with 1
being very dissatisfied and 5 being very satisfied.
4.8 If no to 4.7, what would be the main reason for not filing an insurance claim? (Check all that apply)
[1] Lack of understanding of the claim process
[2] Lack of trust in the insurance company
[3] Complexity of the claim process
[4] Other (please specify)____________
END!
THANK YOU FOR YOUR PARTICIPATION

Annex 3: Kobocollect excel file.

Kobocollect excel file.GROUP 3 FINAL-1.xlsx