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We will implement marine insurance next year – IRA
What you need to know:
- Marime insurance. Local marine insurance will require all imports coming into the country to be insured by local companies.
Kampala. Insurance Regulatory Authority (IRA) will focus on implementing marine insurance in 2019.
Speaking during the 41st Chief Executive Officers meeting in Kampala yesterday, Mr Al Haj Kaddunabbi Lubega Ibrahim, revealed that the sector is having challenges in implementing marine insurance.
“There are challenges associated with enforcement of workers compensation Insurance, marine insurance,” he said.
Marine insurance has been on the radar of the insurance regulator as part of the amendments expected in the Insurance Act.
Local marine insurance will require all imports coming into the country to be insured by local companies. However, implementation is still a challenge because there is no law.
In 2019, IRA has committed to focus its efforts in pushing for its implementation through continued engagements with the Ministry of Finance to issue directives.
IRA also hopes to push for embedding directives in custom laws and extending penalties for non-compliance as well as engaging Uganda Revenue Authority (URA) to come up with a compliance framework.
URA is a key stakeholder in implementing of local marine insurance since it is the watchman of imports and exports.
For the next year, the regulator will also develop mechanisms to improve enforcement of existing insurance laws through establishing a working relationship with Ministry of Gender, Labour and Social Development.
The regulator will also enhance internal as well as industry capacity to effectively adapt to RBS (Risk Based Supervision) through trainings for the board of directors and senior management.
However, Mr Deepak Pandey, CEO Jubilee Insurance, asked the regulator not to burden them with multiple regulations and if possible, take a pause on RBS.
In his response, Mr Lubega said RBS is mandatory that insurance act 2017 dictates however implementation will be phased to allow for swift adaption by the insurers.
He also revealed that the sector is also grappling with challenges of getting government to insure its key assets and properties which the regulator hopes will be cleared in 2019 upon implementing the national insurance policy.
National insurance policy
The national insurance policy is a handbook that will instruct government and the public on assets that call for mandatory insurance.
Mr Lubega was discussing the performance of the insurance companies for the quarter ended September 2018.
According to the report, a total of Shs658b was recorded as Gross Premiums Underwritten with general insurance contributing Shs452b, life contributed Shs150b while Health Membership Organisations (HMOs) garnered Shs54b.
Agriculture Insurance
From January 2018 to September 2018, number of farmers enrolled were 24,407 at a total premium of Shs5.98b and a government subsidy contribution of Shs3.45b.
Bancassurance
The regulator licensed 15 Bancassurance Agents and the sector welcomed two entrants AIG Uganda Limited and MayFair Insurance Company Uganda Limited.
According to IRA, the performance was mainly attributed to increase in private sector credit due to the reduction in CBR which stood at 10 per cent as at October 2018.Favourable weather conditions for agriculture production, increase in Foreign Direct Investments and government continued significant Investment in Infrastructure projects.
However, insurers claim there is a challenge with lack of a law ensuring oil companies insure with local companies.
“The local content law ensuring all insurance companies in the oil and gas pool has to be gazetted to ensure we are one of the providers. We are losing unless we love ourselves like they do,” Mr Allan Mafabi, Britam CEO, said.
Outstanding premiums
Mr Kaddunabbi says there have been cases of outstanding premiums of Shs200b meaning that if Shs700b was Gross written premiums in a year, the outstanding premiums are not with the insurance company to invest. This limits the companies’ profitability and ability to pay claims on time.
