Development. Parliamnet has approved a new law to allow for new products
The Insurance Institute of Uganda (IIU) will this year focus on building capacity in new areas of insurance including bancassurance, Islamic insurance, pensions and micro insurance to equip players with adequate skills in order to harness the sector’s full potential.
This follows Parliament’s approval of the Financial Institutions Amendment Act early last year, to among others, allow for Bancassurance (banks selling insurance products on behalf of insurance firms) and takaful – Islamic insurance.
With Bancassurance, insurers hope to ride on the back of strong confidence in the banking sector and the wide spread branch network coverage to boost insurance penetration from the current 0.86 per cent to about 3 per cent over the next 10 years.
Speaking during the closure of the IIU Annual Insurance Week at Serena Hotel in Kampala last week, the IIU chief executive officer Saul Sseremba, said the move seeks to prepare the industry to fully harness the potential of the emerging areas in insurance.
IIU is the training body of the insurance industry in Uganda which is charged with developing and conducting training activities for its membership.
The Kenya Insurance Institute director Joseph Luvisia Jamwaka, challenged IIU to build more skills, especially in fraud prevention and management, so as to bridge the huge skills gap and support sector growth.
Mr Jamwaka also urged them to localise their training programmes so as to teach issues that are applicable in the Ugandan insurance market.
“You need to consider having more of their local programmes, away from foreign ones. International programmes are meant for the international markets. Teaching a Ugandan motor insurance using UK content is not relevant and it will not help the industry because we are at different levels of development. Localisation is critical,” he said.
Additionally, he urged government to waive tax on insurance products so as to increase accessibility. Government reinstated the 18 per cent Value Added Tax on insurance products about three years ago and also increased stamp duty from Shs5,000 to sh35,000. This increases the cost of insurance as insurers factor it in the final price of insurance products.
IIU members were awarded with certificates and diplomas as associates, senior associates, chartered members and fellows.
The fraud risk
The 2015 KPMG East Africa Insurance Fraud Risk Survey indicates that while the detected insurance claims in Uganda were valued at $10,000 (Shsh36m), it estimated that the actual cost of claims-related fraud is about $500,000 (Shs1.7b), annually.
The commonest form of fraud in Uganda is claim exaggeration where the insured claims a higher value in compensation than that what they would have fairly deserved and medical insurance.
Additionally, there are cases of faked motor vehicle accidents, fires and burglary, among others.