What you need to know:
- Out of a possible 1.7 million insurable motor vehicles, Insurance Regulatory Authority data shows, only 452,954 units were insured during 2022
At least 67.7 percent of motor vehicles on Ugandan roads have no valid insurance policies, according to details from the Insurance Regulatory Authority (IRA).
The high non-compliance, Mr Protazio Sande, the IRA director of research, told Monitor results from weak enforcement mechanisms and limited resources to monitor and penalise non-compliant vehicle owners, noting that enforcing compliance of insurance requirements can be challenging in some areas.
“There has been some slight improvement to about 32.3 percent. The increment is due to digitisation of motor third party payment and improvement in enforcement resulting from integration of our system with the [express penalty tickets] EPS register of the Uganda Traffic Police,” he said in response to our inquiries about the performance of motor third party insurance.
Mr Sande noted that available data indicates that out of a possible 1.7 million insurable motor vehicles, only 452,954 units were insured during 2022, which returned a high non-compliant rate of more than 1.24 million motor vehicles.
Motor third party is mandatory for all motor vehicles but remains sticky because of low compliance.
Majority of motor vehicles, which represents 85 percent, IRA data indicates, hold motor third party policies while 15 percent hold motor comprehensive insurance.
Motor comprehensive insurance covers more risks while motor third party covers third party risks to passengers and other road users.
A study conducted by IRA for the period between 2015 and 2020, indicated that whereas motor third party insurance has grown over time there still exists high levels of non-compliance.
The study indicated that in 2020 compliance remained low at just 26 percent, noting that this did not only affect IRA revenues but denied government substantial income in taxes.
The low compliance, IRA noted, had during the period denied government an estimated Shs42.3b, of which Shs39.26b was due to Stamp Duty, while the insurance sector lost an estimated Shs39b in written premiums.
Beyond this, the study noted there were indirect losses to government due to corporation taxes and jobs, while at the same time government continued to shoulder the burden of remitting medical expenses for victims of accidents of uninsured vehicles.
The report also noted that the insurance sector had between 2015 and 2019 registered substantial growth in insurance policies due to growth in the number of motor third party insurance from 158,279 to 418,117 units.
However, this was far lower than the possible 1.6m insurable vehicles.
“… more than one million vehicles on the roads are without appropriate insurance cover,” the study said, noting that surprisingly, “the traffic department of police disputes this shocking statistics because their officers are continuously on roads enforcing compliance.
Data also also indicated that as of June 2020, Uganda had a total of 2.3m motor vehicles, of which an estimated 10,000 had been written off, while about 750,000 were exempt from insurance.
Motor vehicle Insurance remains one of the most popular classes of insurance in Uganda, grossing more than Shs170b in written premiums, which, according to the IRA study has grown from just Shs69.8b in 2015.
Mr Sande said there was need for increased vigilance, noting that IRA and other stakeholders were currently in the process of amending laws related to motor insurance to enhance the compensation limits so as to increase voluntary compliance.
"We are also proposing provision of digital stickers to help by-pass those who may be moving with forged stickers,” he said, adding that IRA was also looking at enhancing penalties and sanctions against non-compliant motorist.
Growth in motor vehicle insurance