11 February 2013

Uganda: Why Health Insurance Is Still for the Rich

Kampala — The business of insurance is taking momentum among the Uganda elites with a decimal but recognizable growth in recent years.

However there is that bit of insurance that has failed to take off because it's regarded as a luxury and a reserve for the rich people working in corporate companies.

The lack of a national health insurance scheme has made matters even worse considering that the commercial service providers are not willing to invest in areas where they see no value returning on their capital.

Health insurance also known as medical insurance is insurance against the risk of incurring medical expenses among individuals.

It is a type of insurance policy that covers your medical expenses. A health insurance policy is a contract between an insurance company offering the service and an individual protecting him or her against the risk.

The concept of health insurance is not a famous phenomenon in Uganda with the service providers tailoring it for the elite employers and employees neglecting the not so moneyed members of society.

Like other non motor insurance policies health insurance is not fancied as it is associated with class, luxury and being expensive.

By estimating the overall risk of health care and health system expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement.

The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity. Health insurance comes in handy in case of severe emergencies.

Talk of a national social health insurance scheme and National Hospital Insurance Fund (NHIF) never materialized for unclear reasons leaving a vacuum in the delivery of health services.

This means the private sector operators had the responsibility to come up with insurance products to cover up the vacuum.

The scheme was expected to sponge workers against any future health related expenses. According to the draft plan, every employer was required to contribute 4 percent of every employee's gross salary to NHIF as health insurance, while the other 4 percent will be deducted  from the employee's salary.

Government would then raise billions of shillings from the scheme that it would use to offer superb health care services to contributors.

The scheme however was selective as it only took care of people who are formally employed leaving out the jua kalis considering the inefficiencies that surrounded the National Social Security Fund then, another money deducting scheme from the employees incomes brought about lack of trust for fear of misappropriation of their money.

The thought of deducting 8% from the employee's earnings after NSSF's 15% looked so strenuous with senior members of the private sector and legislators rubbishing the scheme.

This could partly have played to death of a key component of delivering health services to the Ugandan masses.

Talk of government strategizing for the delivery of cheaper services went into hibernation leaving privately owned offer a much needed service without the help of government.

"The government does not have any health insurance tailored policies that enable us to deliver services to the people," said Caroline Namugala, the underwriting Officer - Medical dept at Insurance Company of East Africa (ICEA).

ICEA only sells corporate medical insurance. It entails paying medical bills for subscribed members of a particular scheme when they fall sick. "We pay the hospitals they have visited when they present the bills to us," she said.

She however acknowledges that their regulators, the Insurance Regulatory Authority is helping them create awareness among the public.

During the year 2011, insurance premium written rose to UGX.296.44billion from UGX 239.99 billion during 2010, accounting for a 23.52% growth in the industry.

Non life insurance premium collections totaled UGX262.24 billion, up from UGX 216.34 billion registering an increase of 21.21%. In addition, life premium collections totalled UGX34.19 billion in 2011, against UGX 23.63 billion collected in 2010, with a 44.68% increase.

Of the total premium income written, non-life contributed 88% while life contributed 12%.

The meager revenue earning contributing to the insurance sector shows how minimal Ugandans are buying life and health insurance.

As a way of bridging the gap and extending the service to the people the Insurance Regulatory Authority is partnering with service providers to entice them into getting the service.

Mariam Nalunkuma the regulatory body communication officer said the insurance fraternity is looking at exploring new opportunities that are presented by health insurance.

Namugala notes that insurance protects the policy holder against all manner of illness however, the current trend being cancers. "Insurance can help households, individuals, businesses and governments manage risk.

"It offers financial protection from a number of hazards such as fire, burglary, accident and injury and much more in the case of non-life," Namugala said of the need to insure your life.

Namugala revealed that people are yet to appreciate insurance and the negative notion that claims are not paid or take long to be paid which is not true.

"This has affected insurance uptake. As insurance providers we need to educate the public on the importance of insurance and we also need to address the misrepresentations about insurance,"  Namugala observed.

Insurance uptake in Uganda is very low - at 0.6% to GDP, it is the lowest in Africa and in the region with Kenya being the highest at 3.4%.

One of the biggest challenges that we continue to experience is lack of awareness about insurance.

People are not aware that taking up an insurance cover will help them in the future. By taking insurance, it is protecting you from unforeseen circumstances.

Uganda has numerous companies that are offering health insurance but most don't deal with individuals but with corporate companies.

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