Kampala. Insurers have said the sector risks stagnating if government goes ahead to transfer Insurance Regulatory Authority (IRA) to Bank of Uganda.
After more than 20 years of operations during which IRA has supervised the insurance sector, penetration remains at less than 1 per cent, which according to Uganda Insurers Association (UIA), the representative body for insurance and reinsurance companies, would worsen with the impending transfer.
“Uganda presents a 95 per cent market growth opportunity for insurance penetration … to rise to 3 per cent by 2025. It is imperative that we do this in an environment that is sound and secure as has been ably demonstrated by IRA,” Mr Paul Kavuma, the UIA chief executive officer, said in a statement.
According to UIA, insurance supervision must be governed on the basis of core principles, which particularly provide for independence to be accountable and transparent.
Therefore, according to UIA, the proposed reform might impact the sector’s competitiveness and shareholders’ appetite in the local insurance industry.
“Uganda was foresighted and [and] made the provision for the establishment of the Insurance Regulatory Authority as early as 1996 to specifically nurture the growth of this industry. As a result of that move, for instance, total premiums written have increased from Shs296b in 2011 to Shs728b in 2017, signifying a 13 digit growth, “ Mr Allan Mafabi, the UIA chairman said while discussing the proposed transfer.
In September, Cabinet agreed to disband, merge or transfer agencies in a reorganisation, proposing that IRA, which supervises 29 insurance firms, 37 brokers, 14 bancassurance agents, 22 loss assessors, five health membership insures, 1,893 agents and National Reinsurance Company, is transferred to Bank of Uganda.
Ms Mariam Nalunkuuma, the IRA spokesperson declined to comment on matter referring Daily Monitor to Mr Bernard Obel, the IRA acting chief executive officer, who also could not comment on the matter, saying it was premature.
Delivering on mandate
While government’s decision seeks to get rid of duplications, UIA says IRA has been delivering on its mandate through an established partnership with the private sector.