Commodities
Investment minister calls on insurers to support Uganda Re
(L-R) Mr Aston Kajara, State Minister for Investment, Mr Martin Drito, MP Madi-Okollo County, Arua, Mr Alex Wanjohi, outgoing AIG Uganda managing director and Ms Anna Othieno, AIG’s new managing director share a light moment. COURTESY PHOTO.
In Summary
Capital flight. In Uganda, 40 per cent of the total annual premiums are remitted overseas.
KAMPALA/LONDON
Insurance companies should embrace and support the newly licensed local reinsurance company – Uganda Re – in order to boost its capacity to effectively handle local businesses, a government official has said.
Mr Aston Kajara, the Investment State Minister, said the operationalisation of Uganda Re seeks to close the re-insurance vacuum the local insurance industry has been grappling with for decades.
When operational
The Insurance Regulatory Authority (IRA) licensed Uganda Re, the first reinsurance firm in Uganda, last week and it is expected to start operations next month, according to Mr Samson Muwanguzi, the company chairman.
Reinsurance is when primary insurance companies cede part of their risks to other companies – reinsurers – that are ideally stronger so that in case of any risk, the reinsurer shares the risk to avoid huge losses to be borne by a single company. The plan to set up Uganda Re was mooted by the players, arguing that the industry was losing billions of shillings annually in search of reinsurance services overseas.
In Uganda, 40 per cent of the total annual premiums are remitted to overseas countries with operational reinsurance companies. Data from IRA indicates that the amount of money local insurance firms pay in re-insurance premiums abroad has been growing steadily over the years, rising from Shs40 billion in 2008 to Shs115.99 billion in 2011.
Written premium
The industry’s written premiums in 2011 Shs296.83 in 2011, up from Shs239.98 billion in 2010.
With a local reinsurer, all industry players are required to reinsure at least 15 per cent of their business with Uganda Re.
“You must support the development of Uganda Re by underwriting with it as many businesses as possible so that it remains afloat even after settling very high value claims,” Mr Kajara said at a function to welcome AIG insurance new managing director Anna Othieno in Kampala recently. Ms Othieno replaces Mr Alex Wanjohi, who heads to Nairobi for a new regional role of addressing reinsurance and business development for AIG in East Africa.
fkulabako@ug.nationmedia.com
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