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Cars seeking comprehensive cover must have trackers - IRA
The Insurance Regulatory Authority (IRA) has decreed that effective January 2021, all cars seeking comprehensive insurance must have a pre-installed tracking systems.
The directive, IRA said, follows an increase in car thefts that has seen insurer record a sharp increase in motor vehicle-related claims.
“… the Authority [IRA] hereby directs all non-life insurers to ensure that with effect from January 1, 2021, all motor comprehensive policies renewed [or] issued must be for motor vehicles which are fitted with anti-theft car tracking systems [or] gadgets.
The cost of installation of the car tracking systems is to be borne by the policyholder,” a notice signed by Ibrahim Lubega Kaddunabbi, the IRA chief executive officer, reads in part.
The change, according to IRA was premised on concerns of a significant increase in the number of stolen motor vehicles which cannot be recovered.
This, IRA said, has in the long run adversely affected the industry by increasing the cost of motor comprehensive insurance.
Thus, IRA noted, the reform will in the long run lead to a reduction in premium rates charged for motor comprehensive insurance.
However, insurers said IRA should reconsider its directive after undertaking consultation with stakeholders.
Mr Solomon Rubondo, the Insurance Brokers Association of Uganda chairperson the directive “stands in the way of negotiating business because you are now telling customers to do something else before they get insured [yet] we are already having a problem getting people interested in insurance”.
“It just complicates the whole process and it’s an added cost yet the year has not been favourable to many of us,” he said, noting the decision should have come from insurers and not the regulator, IRA.
Motor insurance performance
Uganda’s insurance sector continues to struggle with penetration stagnating at less than 1 per cent.
Motor insurance is a cash cow for general insurers, registering the highest paid up premiums.
For the first half of 2020, general insurers recorded Shs88.1b from motor insurance, which was the highest from all covers.
However, the segment holds the second highest rate of claims after medical insurance.
Comprehensive insurance is an all-round insurance, covering motor vehicles against theft or accident, among others.
Mr Patrick Onyango, the police deputy spokesperson, in September told Daily Monitor that car thefts had increased, especially during the Covid-19 induced lockdown.
At least 50 cars, he said, had been intercepted as suspected thieves tried to sneak them out of the country during the six months to September.
Car tracking
According to Mr Frank Ngobi, the sales and technical director at Sentrack Uganda, a security and surveillance company dealing in car tracking solutions the directive is a welcome move, which whereas it creates an increase in demand of their technology, create a sense of security.
“Of late, it is the small fast moving cars such as Premios and Harriers and four by fours that are mostly needed in DR Congo and South Sudan. So those are vulnerable. If it is stolen and it does not have a tracking system, it is gone,” he said.
According to Sentrack, a car tracking system costs an average of Shs350,000 subject to specifications of the technology. Mr Ngobi said a car tracking device has an inbuilt software, which allows the owner to track its movements either on phone and gives the owner an allowance to disable it in case it is stolen. “You just send an SMS and it will stall. It will decipher the message to shut down the engine,” he says, noting theft of cars with trackers is negligible since thieves avoid them.
