Motorists to pay third party over phone

INSURANCE

The Ugandan insurance industry has been grappling with fraud and false third party claims prompting the Insurance Regulatory Authority of Uganda (IRA), Uganda Revenue Authority (URA), and the Works Ministry to come up with measures they hope will stem the vice.

The trio has launched a mobile payment platform that will see motorists start paying Motor Third Party (MTP) insurance over the phone.

Officials said effective July 1, 2020; the payment of MTP insurance will be easily and conveniently bought via their MTN and Airtel connected mobile phones.

The Traffic Act 1989', states that every vehicle is required to carry a third party insurance sticker against accidents. The main purpose of MTP insurance is to keep a car owner financially protected in the unlikely event of a car accident or damage to property.

Speaking during the launch of the payment platform, Ibrahim Kaddunabbi, the chief executive officer at IRA said the innovation is meant to fight fraud "in this class of business that is characterised by the issuance of fake MTP stickers."  

In 2018, about 32 cases in the industry were related to forgeries, IRA reported. Some 10 complaints were as a result of MTP claims. This means that accident victims faced difficulty in being compensated by insurance firms.  

"There has been a general public outcry about insurance companies not being able to compensate the victims of motor accidents," Kaddunabi told journalists at IRA headquarters.

"The benefits of the new MTP payment Platform is to ensure that all vehicles are issued with genuine stickers and eliminate forgeries which hitherto left many people exposed, and to enable MTP insurance clients to make appropriate insurance premiums to avoid overcharging the public," he added.  

Officials say the innovation is also meant to improve MTP insurance claims management through accurate data, which will be generated daily. 

According to IRA, although they are about 2.1 million insurable vehicles in the country, only about 500,000 are currently insured. 

To put this into perspective, assuming that each car is supposed to pay sh100, 000 on average, this means Uganda Revenue Authority is losing close to sh70b  year on year due to weak enforcement. 

To close the leakage, Kampala Metropolitan Traffic commander Norman Musinga said government agencies have to come up with new technologies that would ease enforcement. 

Improving MTP insurance

IRA said it is fast-tracking the Mandatory Vehicle Insurance Bill and Regulations. Currently, at the Ministry of Finance, the bill seeks to increase liability limits for victims of an accident. 

Currently, the maximum liability limit under the prevailing law is sh1m per person per accident and an aggregate amount of sh10m per accident. 

According to Kadunnabi, the liability limit is too low to provide adequate compensation under the current business environment.   

"In this bill, we want to overhaul the existing MTP insurance. Sh1m meant something in 1988 when this law was made but the process at cabinet-level has taken long since 2016," he said. 

The bill, therefore, seeks to increase the compensation limit to sh10m under bodily injury, death, and property damage at sh100m in aggregate amount per accident. 

Additionally, the bills also seeks to ensure that vehicles including those of government have insurance coverage. The existing law includes an exemption for vehicles owned by the Government of Uganda.