Local insurers seek business with oil sector

Insurance companies in Uganda have embarked on a move to join other sectors, which are already making money from the country’s new oil industry.

They, however, want government to make specifications in both the policy and the laws on oil and gas about what percentage of the local risks should be insured with the local insurance companies to shield them from competition by international insurers.

Despite its nature of huge risks, which is an attraction for insurers, the oil industry has until now not attracted any local insurer owing to mainly lack of technical and financial capacity of the local Insurance companies.

However, unwilling to remain observers, the insurers led by the Uganda Insurers Association (UIA), the umbrella body of all local insurers, has began developing strategies to ensure they too, share the money in the industry.

Mr David Tumuhaise, the UIA technical manager, last Friday said a body called Energy Syndicate has been formed to help boost the capacity of the local insurers.

The plan
He said the body would provide reinsurance, capital and human resource capacity building for the respective members who comprise the local insurance companies.

As a result, he said insurance companies in the country were better prepared through trainings and capital base to insure against risks in the oil industry.

He added that they have completed about 80 per cent of the preparation needed to tap into the oil industry, where he said there were greater risks but also higher levels of profit.

Mr Tumuhaise said the proceeds from the insurance policies sold by the Energy Syndicate would be shared among the members.

However, for the strategy to succeed, the local insurers would require favourable policies and legislation governing the oil and gas sector.

Presently, the local insurance industry believes that the available legislation is not friendly to them.

Mr Tumuhaise said the national policy on oil and gas does not specifically spell out what proportion of the local risks should be insured locally.

Meanwhile the international insurance companies continue to fill the gap by insuring against risks in the country’s oil industry.