IRA to crack whip on cross-border insurance

By David Ssempijja

The Insurance Regulatory Authority (IRA) is to enforce the provision of the Insurance Act that prohibits local enterprises from insuring risks in other countries.

This intervention is expected to improve the performance of the local insurance industry which is struggling.

According to IRA’s public relations officer Mariam Nalunkuuma, local enterprises are not allowed to insure risks in other countries, if such assets can competently and safely be insured locally.

IRA’s decision to strengthen the Act comes after numerous complaints from insurance providers.

They (the insurance providers) claim that IRA’s failure to enforce Section 28 of the Insurance Act, that requires all assets to be insured locally, is detrimental to the industry’s growth. 

Insuring risks in other countries opens avenues for the outflow of billions of shillings worth of insurance premium, whose retention would significantly support local growth.

Uganda’s insurance sector loses 40% of the total premium to other countries but part of it exits through re-insurance arrangements because there is no local reinsurance firm, save for the soon- to- be operationalised Uganda-Re.

“It is not true that IRA is failing to execute its mandate. We have tried to ensure that local enterprises that need insurance always get in touch with locally licensed insurancecompanies to give them the necessary insurance cover.

Enforcement has been in place and we are going to double our efforts on this matter,” she said. Nalunkuuma clarified that for risks where local insurance companies don’t have enough capacity to underwrite or retain the risk, IRA has given guidelines to follow.

However, Nalunkuuma noted that successful enforcement of laws in all sectors needs public support in provision of information  about defiant members of society.

“We encourage the public to inform the Authority of any members contravening the law because whenever we get such information, we act appropriately,” she added.

The sector posted growth of 23.5% for the period ended December 2011. According to the results, insurance premiums rose to sh294.44b in 2011 compared with sh239.99b recorded the previous year.