The Insurance Company of East Africa (ICEA) will this year split their general business and life insurance divisions.
Chief Executive Officer John Karionji announced recently that the split was meant to comply with the Insurance Amendment Act, 2011, which requires all composite (both life and non-life insurance) companies to have separate entities. Enforcement of this rule is expected to take effect in 2014.
The new law stipulates that no person shall transact the business of life insurance and non-life insurance as a composite company. Karionji believes the rule will create more jobs and efficiency in service delivery since different companies will now focus on a single area of operation. However, it is likely that the separation of the business lines will add to the operational costs of the companies, costs that are more likely to be passed on to the consumers.
Mariam Nalunkuma, the public relations officer at the Insurance Regulatory Authority (IRA), says only those firms with separate businesses will be licensed next year. Nalunkuma sees this separation of insurance business lines as the only way Uganda could promote life insurance.
Other composite insurance companies that will be affected include UAP Insurance Company, Jubilee Insurance Company, and National Insurance Corporation. Uganda has 22 insurers.
The same law also introduces the Insurance Institute of Uganda - a school to equip Ugandans with skills that are critical to the sector's growth.
Karionji welcomed this move, citing lack of trained staff as a major challenge for the industry. In the amended law, every insurer is a mandated member of the Insurance Institute of Uganda, and is expected to remit a levy of 0.5% off premiums collected in order to fund the institute.