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Uganda Insurance watchdog seeks to raise paid up capital to sh5b
Monday August 22, 2011
The Uganda Insurance Commission (UIC) is proposing to raise the paid up capital for insurers and brokers by up to four to five times, a top official said last week.
The official argued that the move was expected to strengthen a sector that still grapples with comparatively low penetration levels and public confidence.
If the move takes effect, insurance firms involved in life and non-life business, would be required to raise their paid up capital from sh1b to sh5b for non-life and to sh10b from sh5b for reinsurance companies.
“We have weak companies that cannot add value in the market in form of coming up with better products. You are aware we are looking at the East African Community,” Ibrahim Kaddunabbi, the UIC commissioner, said during a stakeholders breakfast.
Kaddunabbi pointed out that raising the paid up capital would ensure an increased premium base for companies to be able to pay claims and expand regionally.
He explained that the move would also allow local companies to retain significant premiums emanating from the impending oil business.
UIC had suggested that the associations of brokers and insurance companies revert to the commission with their stated positions on the matter by August 31, but the Uganda Insurance Association asked for one month deadline extension.
The issue of unscrupulous brokers who do not remit premiums to insurance firms and the defaulting insurance companies that do not pay commissions to brokers was also raised in the breakfast hosted by UIC.
“In the wider perspective, this affects the image of the industry and ultimately penetration slows down,” said Kaddunabi.
Some brokers asked for the naming and shaming of brokers who fail to remit premiums, saying they were tainting the image of the brokerage fraternity. Others had wanted discussions on defaulting firms to be held in private.
But Kaddunabi rejected the request, saying “these are issues that affect the industry and must be dealt with openly.”
“There are a few who are not doing their work properly and we need to get a solution to this,” said Kaddunabi. He supported the proposal on naming and shaming unscrupulous firms and brokers.
“I would go for that. If you decide to open up a company, you should do the right thing. The naming and shaming should not stop for brokers but even insurance companies,” said Kaddunabi.
Mathew Koech, the insurers association chairman, agreed that there was need to revise the paid up capital, but asked that this be done gradually so that firms are given time to source for additional capital.
By David Mugabe: The New Vision Newspaper
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