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Fraud Persists in Motor 3rd Party Insurance Despite Mobile Platform

Last year, the Insurance Regulatory Authority launched the mobile payment platform for motor third party insurance where customers would use their mobile phones to buy the insurance policies. This, according to the Uganda Insurers Association has only increased the uptake by 2 per cent, which is lower than had been expected.
20 Sep 2021 17:53
Police say taxis and boda-bodas dominate 3rd Party Insurance fraud. Photo by Police

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Uganda’s insurance industry is struggling to deal with the high levels of evasion of the Motor Third Party Insurance, a compulsory insurance policy for all motor vehicle or motorcycle owners.

The insurance industry players say bodaboda riders or owners, followed by taxis, are the main culprits because they evade payment of the Third Party Insurance. As a result, some motorists out-rightly drive or ride without insurance stickers, while others get fake stickers.

Last year, the Insurance Regulatory Authority launched the mobile payment platform for motor third party insurance where customers would use their mobile phones to buy the insurance policies. This, according to the Uganda Insurers Association has only increased the uptake by 2 per cent, which is lower than had been expected.

According to the system, on payment using the mobile money platform, a message is sent to the policyholder, who then proceeds to any insurance company or agent to get a sticker. This system also means that the person paying for the policy must be the registered owner of the vehicle, since the platform integrates insurance with the motor vehicle registration validation system at the Uganda Revenue Authority, URA.

Many Ugandans however, still have vehicles not registered in their names and these either evade or pay for insurance by allowing the agent to transfer the details of the current sticker to the new sticker they are buying and in this way they pay physical cash and avoid the mobile money platform. UIA Chief Executive Officer, Paul Kavuma says this is also illegal.

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Kavuma says insurance companies are now innovating more to make the third party policy easier to buy by reducing the costs involved, as a way of also curbing evasion without using force. He cites the partnership between MTN and Britam which allows motorists to buy the policy and instantly get the sticker from any MTN shop.

Saul Seremba, the Chief Executive of the Insurance Institute of Uganda says evasion of the Third-Party Policy is just one of the many if not all, insurance policies that people think are not necessary or can be avoided. He says the most important thing is for the industry to ensure that the public is not only sensitized about insurance but also trusts that insurance is beneficial in case there is an accident or any unfortunate happening.

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On the boda-bodas evading payment for Third Party, Kavuma suggests that there should be a balance between the expenses the cyclists meet, including the taxes, operational charges, the repayment of the loans on their cycles and insurance. He says when they have to meet all the other expenses, the easiest one to evade is insurance.

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Britam Insurance Chief Executive Allan Mafabi says the industry must continue to innovate to make insurance as friendly and easy as possible if they are attracting more people and increase the penetration from the current level of less than 1 per cent.

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The head of the Police Publications department Emilian Kayima says the police force will continue to use all means available to ensure the law is complied with. “Accidents really account for most of the deaths at all regional hospitals around the country. We shall apply the carrot and stick approach of enforcement and education to change this”

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