Insurance companies will now have to provide money from their profits to cover any losses in what is called provisioning. “When you buy let’s say Treasury Bills and any Security or any Asset you are buying. How will you be providing for it? That in case there is a loss, even when I buy it you must project that there would be a loss and what those percentages would be.” Said, Ibrahim Kadunabbi Lubega – CEO, Insurance Regulatory Authority.
So even when the industry is trying to reach many people, the new financial reporting standards not everyone who wants insurance will get it or at least it might be more expensive depending on one’s risk profile. “Now counting in simple terms provisions will reduce the profitability of a company. So to the policyholder, if I hold say a policy of one of the insurance companies it means there is a credit risk that is attached to me. So what we see are happening with the new standard because the insurance companies want to remain profitable. They will look at you more critically in terms of your credits, ratings, and your ability to be able to pay insurance.” Said, Wilson Kayindi – Senior Manager, KPMG Uganda.
Ibrahim Kadunabbi Lubega the Insurance Regulatory Authority Executive Director said that the standards are aimed at ensuring a high level of transparency among insurance companies and consumers.