The State Minister for Finance, Henry Musasizi has said the launch of an online platform for payment of marine cargo insurance is a gamechanger in revenue collections by government and reducing premium flight.
All importers are required by law to have a local marine cargo insurance policy for all incoming cargo.
Speaking during the launch of the portal in Kampala on Wednesday, Musasizi said government has been losing a lot of money in terms of premiums to foreign insurance companies.
"There has been capital flight and revenue loss that government faces through insurance of imports by foreign insurers. We have noted from the Inter Government Standing Committee on Shipping (ISCOS) Report of 2015 that between 2009 and 2013, government lost revenue of shs 60.3bn as VAT and shs35bn as Stamp duty through insurance of imports by foreign insurers. This is in addition to the massive insurance premium flight. With an increase in imports over the years, the country has certainly lost more revenue," Musasizi said.
The minister said with the launch of an online platform for local marine cargo insurance that is synchronized with URA systems including ASYCUDA, e-tax system and the Single Window has been developed, and successfully integrated, this will be a story of the past.
"With this innovation going live, government will get more revenue, the cost of doing due diligence and pursuing a claim settlement shall be eliminated and there will be reduced commodity prices since traders buy dollars to pay insurance premiums which increases the cost of importation, translating into high commodity prices," Minister Musasizi said.
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He hailed the Insurance Regulatory Authority and Uganda Revenue Authority for the job well done to deliver this integrated platform.
Insurance Regulatory Authority CEO, Alhaj Ibrahim Kaddunabbi Lubega said the platform will ensure that a locally licensed insurance company covers the insurance component in Cost Insurance and Freight (CIF).
"Going forward, we would like to sensitise our domestic importers to only get quotations for Cost and Freight from their supplier, as the insurance component will be provided by the local providers via the platform we are launching today at your convenience, by the click of a button,"Kaddunabbi said.
He said the platform will empower the local insurance industry where many importers have relied on foreign insurers for marine cargo coverage, leading to substantial capital outflows and challenges in claims processing.
"This portal redirects these opportunities to our local insurance companies, strengthening their capacity and fostering industry growth. This move is under Section 8(3) of the Insurance Act, 2017, which mandates procuring marine policies from locally licensed insurers. This will enable importers to buy insurance in local currency at highly subsidised premium rates," he said.
Kaddunabbi also highlighted improved claims processing as one of the critical advantages of the new platform.
URA officials said the new platform speaks to the taxman's digitization strategy.
