Insurance firms warned against high costs
Insurance Regulatory Authority chief executive officer Ibrahim Kaddunabbi Lubega
What you need to know:
Expenses are not supposed to beyond 30% of premiums.
KAMPALA. Insurance Regulatory Authority (IRA) chief executive officer has cautioned insurance providers against high costs of management which he said affect their ability to meet their claims.
“Health Maintenance Organisations (HMOs) are being regulated for the first time and we have discovered that many of them were having high management expenses,” said Mr Ibrahim Kaddunabbi Lubega.
He was speaking to human resource managers during a breakfast meeting hosted by IAA Health Insurance in Kampala last week.
Mr Lubega said the insurance fraternity has guiding expenses and as such where they see management costs going above 20 per cent of the premiums collected, they get concerned.
“If the management expenses exceed 30 per cent, then it becomes unbearable because the recommended rate is below 20 per cent of the premiums,” he said.
Mr Herbert Mukoza, the general manager IAA said the biggest challenges they face as HMOs is the high costs in terms of consultation charges and drugs. “The other challenge is the low insurance penetration and the numbers we have cannot make us break even,” he said.
Industry growth
According to the IRA industry report for 2015, the industry registered a 21.58 per cent growth, up from nine per cent registered in 2014. Firms realised Shs50b in insurance premiums in 2015 with the life insurance premiums growing at a rate of 35.67 per cent while non-life and health maintenance organisations grew by 21.47 and 0.26 per cent respectively.
