This Act was introduced as a bill in 2016 by the Ministry of Finance. It was intended to repeal the old Act and remedy a number of its defects. The bill was also to provide for the regulation governing the business and to continue the existence of the insurance authority of Uganda.

Key Highlights and Analysis of the Act

  • Part one deals with preliminary matters and key definitions. It offers a corporate cover to all insurance companies and hence they can be sued by people in their name. Similarly, it simplifies the formation of various forms of insurance companies like mutual insurance in section 8 which only requires 25 people and form a memorandum. Under such methods, insurance services are brought closer to the people. This increases the insurance coverage.
  • Part two runs from sections 10 to 20. It establishes the insurance authority of Uganda. It provides for the composition of the authority functions and the board since it had no governing board like any other statutory body.
  • Part three deals with staff of the authority like the executive officers.
  • Part four deals with sources of finance for the authority. Section 25 provides that funds consist of funds appropriated by parliament, grants donations annual contributions fees charges and any other funds received by the authority in performing its work. The part also provides for other matters like duty to operate on sound financial principles, power to open accounts borrowing powers and estimates financial of the authority and accounts and audits.
  • This part and the sections there under help to avoid corruption, openness in the financial transaction of the authority and steady supply of revenue for the authority thereby ensuring effective operation.
  • Part five relates to the licensing of insurers and health organizations. The Act provides for licensing procedures per insurance core principles and also provide for licensing requirements for new players such as banks engaging in the insurance business. Therefore, capital requirements are key to secure the customers. It similarly lowers the requirements for mutual insurance and micro-insurance, thereby increasing the access to insurance to small business. The law equally calls for security deposits for insurance companies to safeguard the customers and the creditors in case of liquidation.
  • Part six deals with prudential regulations of the insurers and micro insurance organizations. In particular it deals with the maintenance of sound financial conditions by the insurers. The share capital of the insurer or Health Maintenance Organizations (HMOs) the, requirement to make security deposits, issues relating to risk management, mandatory reinsurance placements with international and national organizations and licensed intermediaries and prohibition of entering into insurance contracts without premium. This part and the sections there under safeguard the insured against insurers who may fail to take care of the risks registered. This is why they are required to reinsure so as to strengthen their compensation capabilities. The need for share capital and security deposits is to protect the premium of the insured as well as safeguarding the insurer from collapsing. Such prudential requirements are a strong economic buffer in the insurance industry. The Act equally prohibits contracts without premium so as to ensure steady inflow of money for the insurer hence strengthening their capability.
  • Part seven provides for reinsurance business. It creates chance for insurance companies to reinsure their risks in case of any work. Similarly, the law gives the authority power to alter and protect insurance companies from entering into reinsurance contracts which are not favorable. It similarly requires those under reinsurance business to undertake mandatory reinsurance with other international and foreign reinsurances by making security deposits. This protects reinsurers against risks.
  • Part eight of the Act provides for amalgamation and transfers. Section 75 restricts amalgamation and transfers. As such an insurer shall not without prior written approval of the authority transfer its part of the business to another person, or accept a transfer of insurance business of another insurer or any part of the business or amalgamate.
  • Part nine contains crucial provisions on insurance intermediaries’ and bancassurance. It also relates to licensing and regulation of insurance intermediaries’. It also handles authorization of assurance. Specifically, it deals with prohibition of unlicensed insurance intermediaries, unauthorized banc assurance, insurance intermediary licenses. It gives instructions and procedures to intermediaries on how to apply as insurance intermediaries. It places restrictions on them on holding moneys or premiums for insurance policy holders.
  • Part ten provides for the regulations of significant changes in the control, management and constitutional instruments of licenses. It deals with changes in control, the application for approval for change of control, the authority’s power concerning significant owners, changes in directors, senior management and key persons in control functions. It gives the authority powers to reject a transfer and equally regulate the process through which changes in management and control can be affected without affecting the public or the legal system on insurance.
  • Part eleven provides for financial records and statements, reporting and auditing for example the part provides for preparation of financial statements, appointment of auditor and audit report submission of such documents to the authority. This section largely deals with financial management by the insurer, means of ensuring sound financial policies and openness in their transaction while keeping the authority in the know of their business.
  • Part twelve provides for inspection access to information and enquires by providing for onsite inspection, duties of licenses and their directors or senior managers.
  • Part thirteen relates to remedial measures and enforcement by providing for recovery plans that the authority may give an insurer or an HMO. This is aimed at protecting the breach of license conditions or ensure fulfillment of solvency standards in the law. The authority has powers to issue directives for recovery plan and also launch investigations per section 123 of the Act. Section 125 gives the authority powers to take over management of the business so as to restore sanity of the business and ensure following of the license conditions while holding persons liable accountable.
  • Part fourteen deals with winding up of Insurers HMOs and insurance intermediaries. Section 130 gives the authority exclusive powers to wind up an insurance business. It equally can permit a person to take any other measures for winding up but exclusive powers are vested in the authority. Section 131 gives some of the grounds that can be used to wind up a licensee like becoming insolvent or not following the standards of the license or operating out of licensing procedures per the act among other reasons. Such powers give a strong mechanism to the authority in regulating insurance business and holding the insurers accountable while safeguarding the insured.
  • Part fifteen provides for general matters with specific provisions relating to insurance appeals tribunal, policy holders’ compensation fund, establishment of a training college and other matters. Such matters are aimed at dispute resolution in insurance policies, provision of more skills and knowledge in the management of insurance services thereby strengthening the effectiveness of insurance services in Uganda.

Implication of the Insurance Act, 2017

The law equally creates more space for micro insurance through its legislation. It simplifies the requirements for licensing, provides for health member organizations so as to expand the scope of insurance. Banc assurance is yet another concept introduced so as to widen the provision of insurance services to various sectors of the economy.


The Act extensively regulates the insurance business covering all its major aspects. It expands the scope of insurance business while setting up several strong safeguards to protect clients while keeping the business in motion.

This law simplifies the requirements for licensing, provides for health member organizations so as to expand the scope of insurance.