Govt Gives Business Community 3 months to Voluntarily Join Local Insurance or Face the Wrath of Law
The Uganda's Ministry of Finance Planning and Economic Development has announced that all business men and women dealing in importation of goods to Uganda must get insurance locally in a period of three months, taking immediate effect, until 1st February next year.
A statement read on behalf of the in charge Minister Hon. Matia Kasaija by his Permanent Secretary and Secretary to Treasury, Mr. Ramadan Ggoobi at Uganda Revenue Authority headquarters, Kampala, during the launching of the new Local Marine Insurance Platform, as the chief guest, indicated that failure to comply, serious consequences in line with the law enforcement awaits.
Wednesday, reading further, Ggoobi said, it is a great honor to stand before the audience to celebrate yet another very important milestone as they announce the great innovation, the integrated platform for local marine cargo and goods in transit insurance. He commended the URA and Insurance Regulatory Authority of Uganda for the job well done in delivering the new platform.
According to the PSST, 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,”
In July, 2017/18 budget, the Ministry of Finance made a pronouncement that government would empower locally licensed insurance companies to issue all policies relating to marine cargo domestic insurance and also directed the IRA to administratively enforce and implement the provisions in the insurance act to ensure that only locally licenced insurance companies issue insurance policies for goods imported from other countries, except personal donations, this was an outcry from the general business community and the importers, added Ggoobi.
About the Newly Launched Local Marine Insurance Platform:
This is an initiative by the Insurance Regulatory Authority of Uganda (IRA), in partnership with the Uganda Revenue Authority (URA) and the Uganda Insurers Association (UIA).
The portal will enable all importers of goods into the country to buy marine insurance from insurance companies licensed by the IRA, so as to safeguard their imports from unforeseen risks.
The online portal has been synchronized with URA systems (ASYCUDA, e-tax system and the Single Window), integrated, and has since undergone successful User Acceptance Tests.
Licensed insurers have developed capacity to handle the risks through a consortium of 20 non-life insurance companies that have jointly pooled resources for purposes of insuring all marine-related risks and pay all claims that may arise.
Benefits of the Launched Insurance Portalinclude, Increased revenue for the Government, It eliminates the cost of doing due diligence and pursuing a claim settlement, reduces commodity prices since traders buy dollars to pay insurance premiums which increases the cost of importation, translating into high commodity prices.
The portal will also create an environment for excellent negotiation in terms of suitable cover, price, and claims recovery terms on marine insurance policies, with local insurers. The prevailing local marine insurance premiums will be very favorable to the importers and exporters since the increase in the pool insuring shippers/importers will generate economies of scale, and also can be accessed through (marine.uia.co.ug.)
President Uganda Insurance Agents Association (UIAA), Moses Joshua Muyomba gave a review to this media website during the launch regarding government revenue Increase through the new Online Insurance Portal. This is part of the government's efforts to increase revenue by collecting from importers and service providers. The online service portal has been launched for importers to book and obtain digital insurance policies and certificates.
Muyomba included that the portal aims to streamline the process, allowing importers to input their information online and receive digital insurance policies, it also includes engaging the insurance regulatory authority and incorporating brokers, bank agents, and other stakeholders into the system, he noted.
On the issue of engagement with Stakeholders and System Inclusion, he explained, emphasizing the importance of engaging stockholders, including agents, brokers, and bank agents, in the system. The platform aims to facilitate interaction between importers and service providers, affecting the work of these stakeholders because the system is designed to benefit all participants, including those who are currently outside the formal system, but highlighted the need for a three month period for business people to adapt to the new system.
These changes, taking effect by January, shall affect the business operations. However, The system aims to provide a level playing field for all business people, regardless of their current status. And it is part of a broader plan by the insurance company or agent to incorporate these changes. In conclusion he said, it is important to engage all relevant stakeholders to ensure a smooth transition to the new system.
