Insurance regulator drafts laws targeting low income earners
As the insurance industry regulator moves to formulate laws to govern the micro insurance business in Uganda, players have asked for the incorporation of channels that will enable them to collect premiums in a cost-effective way.
Speaking at a meeting to launch a project to develop micro insurance regulations on Tuesday, the Uganda Insurance Brokers Association chairman, Mr Latimer Mukasa, said although micro insurance is a key area that will increase insurance penetration levels; the biggest challenge would be on how to collect premiums from up-country.
He said since micro insurance targets the low income earners, it will require that players collect premiums monthly because most people might not be able to pay the annual premiums at once; something he believes will be costly for players.
He added that exploring channels like mobile money and other money transfer mechanisms would be good for the industry.
The Insurance Regulatory Authority in partnership with GIZ – a German government enterprise – Making Finance Work for Africa and Access to Insurance Initiative is developing micro insurance regulations to enable insurance companies offer affordable products tailored towards low-income earners, who have for long viewed insurance as an elite product.
This follows the amendment of the Insurance Act in 2011 that gave way for the development of micro insurance business in Uganda.
IRA chief executive officer Ibrahim Kaddunabbi Lubega, said a consultant has been hired to explore the impact the current policy and regulatory framework has on micro insurance development. The consultant will also design sub-sector regulations by September.
