IRA faulted for unlawfully revoking insurance licence 

The Court of Appeal in Kampala has faulted the Insurance Regulatory Authority (IRA) for failing to adhere to the law while revoking an operating license of one of the insurance companies in Uganda.
In a unanimous judgment, a panel of three justices of the appellate court held that IRA did not comply with Section 33(2) of the Insurance Act in so far as it did not serve Leads Insurance with the notice of breach as prescribed by the section.

“The effect of the combined use of Section 33(1) (a) of the Insurance Act and Regulation 9 of the Insurance Regulations 2002 when the respondent revoked the appellant's license appears to have been intended by the respondent to circumvent the requirement to give the appellant (Leads Insurance) the notice prescribed by Section 33(2) on account of existence of circumstances "where the public interest requires immediate revoking of the license". Such an approach is erroneous,” ruled Justice Muzamiru Mutangula Kibeedi who wrote the lead judgment.
According to the judges, the requirement for notice before revocation is rooted in the Parent Act itself. 

“lt cannot be modified by a regulation made under the parent act. As such, the provision in Regulation 9, the effect of which is to authorize the revocation of an insurance license without notice is a nullity to the extent to which it is inconsistent with Section 33(2) of the parent act,” the judgment adds. 
Court further ruled that it is important that whatever the style and diction used, the reasons for the revocation decision must be sufficient to enable the person to whom they are addressed to understand why the decision has been given the way it has been given.

Court also observed that the decisions by IRA to close the company 10 years ago were simply stated to be "in public interest" and "for protection of policy holders, however there is no doubt that the said "reasons" were simply a regurgitation of the words used in Section 33(1) of the insurance Act.
“The respondent did not make any effort to show the materials which were before it when considering the appellant's case, and why it came to the conclusion that making the revocation decision was "in public interest" and "for protection of policy holders,” Justice Kibeedi added.
However, the court also agreed that in the circumstances of the case, the intervention by a regulator when an insurance company is faced with operational challenges as a result of its bank accounts being frozen by Bank of Uganda and court is not irrational.

It’s against this background that the appellate court set aside the ruling and orders of the High Court with costs.
Justice Kibeedi heard the appeal alongside justices Fredrick Egonda- Ntende and Christopher Gashirabake.
In its appeal, Leads Insurance said it was aggrieved with the decision of the High Court that ruled that it did not have any grounds for judicial review after IRA revoking its license.
They also faulted the trial judge for failing to evaluate the evidence before him in order to establish whether the IRA acted illegally, irrationally and with Procedural impropriety when it revoked its license.

Leads Insurance further stated that no written notice was ever issued informing them of a breach and requiring them to remedy any breach as required by section 33(2) of the insurance Act and that the notice of revocation did not disclose any reasons for the IRA's decision revoking its license.
However, the IRA stated that the immediate revocation of the license was in the public interest owing to the fact that insurance’s bank accounts were frozen and that it had failed to settle claims.
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