In a bid to curb the loss of millions of dollars to foreign insurance companies, the Insurance Regulatory Authority (IRA) is pushing for government’s implementation of the law that empowers local firms, writes ALON MWESIGWA.
To businessman Gerald marine insurance was just a sum paid to international shipping partners. He did not even believe he can do anything in the unfortunate case that he lost goods in transit until misfortune struck in 2016.
“I simply thought it was any other cost until my cars got damaged on the route to Mombasa,” he says.
“I had no option but to give up because I couldn’t follow up the issue with the Japanese firm and I also didn’t properly understand the insurance cover I had.”
Like Kisitu, many local traders have no idea what type of insurance cover they obtained and the extent of coverage in case of loss and claim settlement.
So, they have to sit with the uncertainty of whether the foreign seller has actually insured the goods as contracted in the arrangements.
This includes other challenges such as language barrier and the cost of pursuing the settlement in a foreign country. In light of this, the Uganda Insurers Association has embarked on efforts to sensitize importers about marine insurance in a bid to complement efforts by IRA in creating awareness and appreciation of the local purchase of marine insurance.
The efforts have commenced with various stakeholder engagements targeting different groups including Uganda Shippers Council, Uganda Clearing and Forwarders Association, Uganda National Chamber of Commerce and Industry, Uganda Small-Scale Industries Association, Kampala City Traders’ Association (KACITA) as well as other groups such as car importers, manufacturers, printers, freight forwarders and haulage operators, among others.
The sensitization covers the insurance policy options, the benefits of purchasing the insurance policy locally, as well as the claims process in case of loss or damage of cargo.
According to Ibrahim Lubega Kaddunabbi, the IRA chief executive, Ugandan importers will start to appreciate that purchasing insurance from a local insurer is cheaper and gives buyers more control over the types and levels of insurance purchased.
“The most obvious benefit is that it is easier to engage an insurance company in Uganda as opposed to one in another country and with local marine purchase, a trader will be able to reduce the importation costs and the anxiety related to loss and damage,” he says.
“In the mean- time, importers should endeavor to acquire as much knowledge and information about marine cargo insurance as possible.”
RELIEF ON THE WAY
Going forward, this means that if any Ugandan importer chooses to in- sure their imports, they have to do so with a Ugandan insurance company.
Last year, government, through the ministry of Finance, made a key pronouncement through the background to the Budget for fiscal year 2017/18 paper, June, 2017 that; “It is empowering locally-licensed insurance companies to issue all policies relating to domestic marine cargo insurance effective July 1, 2017 and that IRA administratively enforce and implement the provisions in the Insurance Act under Section (3) (2).”
In fact, Section 3 (2) of the Insurance Act highlights says that no per- son, other than a person licensed as an insurer under this act, shall issue any insurance policy on ‘Goods imported from other countries except personal effects and donations’.
However, the implementation is yet to take effect and because of this delay, the country continues to lose millions of dollars that go to foreign insurance companies for goods destined for Uganda.
Edward Katongole, an insurance broker, says it is essential for businesses engaging in international trade, especially those shipping large quantities of goods by sea to take up marine insurance policies.
Specific terms and benefits vary widely across the world, and many marine insurance policies are customer- tailored for specific shipments, but a few general principles apply to the entire industry.
“With a representative or agent of any local insurance company and, or perhaps with the help of a good insurance broker, cargo can be insured for a single shipment or multiple shipments over a specific time frame,” he says.
“Most policies will provide coverage for the cargo’s value as well as other charges based on the payment that would have been received if the cargo were to reach its destination.”