Insurance brokers to lose licenses over premiums

Nov 13, 2013

UGANDA has 28 licensed insurance brokerage firms and 22 licensed insurance firms. The brokers sell the insurance products and collect premiums before remitting the same

By Samuel Sanya

INSURANCE brokers are not remitting premiums to insurance firms, leaving many clients at the risk of real loss of property, incomes and lives.

The insurance regulator is now threatening not to renew licenses of errant insurance brokers.

“There is no justifiable reason why insurance brokers are not remitting insurance premiums to insurers,” said Ephantus Githinji, the AON financial controller.

“Some brokers keep the premiums to solve their own financial issues. In case of accident, the insurer will simply say that the client was not covered as they were not honouring their premium payments,” he added.

Uganda has 28 licensed insurance brokerage firms and 22 licensed insurance firms. The brokers sell the insurance products and collect premiums before remitting the same to insurance companies which actually compensate clients in case the insured risks occur.

Insurers are supposed to invest part of the premiums to sufficiently cover risks, however, the brokers are holding onto premiums going against the insurance act.

Premiums of up to sh50b for medical cover, motor third party, life insurance and comprehensive car insurance have not yet reached their intended insurance companies.

Alhaj Kaddunabbi Lubega, the IRA boss, has instructed all brokers to submit a letter of clearance from insurers they have placed business with by the end of November to qualify for a new license.

The insurance sector registered a growth in gross premium written to sh351.23b in 2012 from sh296.83b the year before, representing an 18.48% growth in the industry.

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