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Mobile phones start offering third party insurance

The new technology extends relief to insurers to curb industry fraud

Kampala, Uganda | ISAAC KHISA | For many years, Uganda’s insurance firms have failed to grow the Motor Third Party Insurance business amidst a surge in the number of vehicles on the roads as a section of motorists resorted to using forged policy insurance certificates.

Statistics from the Insurance Regulatory Authority of Uganda shows that out of the country’s 2.5million insurance vehicles, only 500,000 have the mandatory Motor Third Party Insurance, translating into approximately Shs200bn in lost revenue to the insurers and Shs70bn in lost stamp duty to the government.

To make the situation even worse, there has been a general a public outcry about insurance firms not being able to compensate the victims of motor accidents.

This situation is now expected to come to an end as the Insurance Regulatory Authority of Uganda (IRA) in collaboration with the Uganda Revenue Authority, Ministry of Works and Transport and the Uganda Insurers Association develops a mobile payment platform to streamline the operation of Motor Third Party Insurance, setting pace for insurance companies to invest in offering products digitally.

The platform which came into operation effective July 01, 2020, will see motorists purchase Motor Third Party Insurance policies via their mobile phones using mobile money.

Joseph Ndiho, the project’s technical leader at IRA, said the new system which can be accessed using both smart phones and the basic phones, is linked to the different government agencies to also verify the owner of the motor vehicle.

“There’s going to be no room for premium negotiation between a customer and an insurance firm because the system will automatically pick data from the car registration agency indicating the car type and owner based on the registration number inserted into the mobile money platform and automatically indicates the amount of money one is supposed to pay for the policy,” he told The Independent in an interview.

“Now, once the payment has been made, a statement is generated indicating payment of insurance for a particular car, which is then presented to any insurer of choice,” he said.

“The insurer will then key in the codes of the statement generated in their system, confirms every data and a Motor Third Party Insurance certificate is issued,” he added.

For purposes of fairness in choice of the insurer, the system does not provide a list of 21 insurance companies that a customer can choose from to purchase Motor Third Party Insurance policy.

Ndiho said the innovation means that various clients in the motor industry will be in position to identify owners of vehicles, with the traffic police officers and insurance firms placed in position to authenticate the motor third party certificates.

This development comes as annual police report for 2018 shows that accidents claimed 3,194 people during the year, slightly above the 3,051 deaths registered in 2017 amidst a drop in the number of road accidents. The number of people who got serious injuries were   6,085 while those with minor injuries were 3,526. In spite of these alarming accidents, injuries and deaths, insurance industry players say few people are compensated as there are few authentic Motor Third Party Insurance certificates that can facilitate compensation of accident victims.

Ibrahim Kaddunabbi Lubega, the chief executive officer at IRA said the new platform will not only eliminate forgeries in the Motor Third Party Insurance certificates but also enable clients make appropriate insurance premiums so as to avoid over-charging the public.

“This platform will also improve Motor Third Party Insurance claims management processed through accurate data which is generated on a daily basis, and therefore reducing substantially the period between claim lodging and settlement,” he said.

“From a regulatory perspective, we are certain that having a central consumption process of Motor Third Party Insurance will enable us set policies that protect and safeguard the rights and benefits of the policy holders. These are some of the lessons learnt during this coronavirus pandemic.”

Commenting on the new innovation, Norman Musinga, the senior superintendent at the Uganda Police Force said the platform is a savior to the traffic department.

“While this platform benefits the insurers, I think police is a big beneficiary,” he said.

“For years, it has been difficult to determine which Motor Third Party Insurance certificate is authentic or not. The fact is that we have so many forged certificates but we didn’t have an option of verifying them.”

Musinga, however, urged the insurance industry to be ahead of any criminal minded individuals that may attempt to by-pass the new system.

Paul Kavuma, the chief executive officer at the Uganda Insurers Association said they are proud of the new innovation as the new initiative will not only help the industry record growth on business but also ensure that accident victims are compensated.

Gross underwritten premiums from motor insurance policies have recorded slowest growth over the last five years from Shs100.6bn in 2013 to Shs144.4bn in 2018.

“We are striving to continue coming up with new products that can be accessed online,” Kavuma said. Uganda’s insurance industry is also striving to have marine insurance online soon.

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