The Insurance Regulatory Authority (IRA) is to shift from compliance-based supervision to risk-based supervision to increase sector flexibility in line with global standards.
This will require amendment’s to the Insurance Act 2000.
Risk-based supervision will ensure that insurance players maintain capital adequate to meet the risks they face while allowing the IRA to allot more time to supervision of riskier sector players.
“We already have elements of riskbased supervision, however, the insurance law will have to be amended to allow for a shift to risk-based supervision from compliance-based supervision,” said Kadunabbi Lubega, the IRA executive director.
“A consultant has drafted a report about risk-based supervision for the IRA. Another consultant will guide us on what needs to be done to implement the new supervisory regime,” he added.
Lubega was speaking at the insurance sector CEO’s meeting at the Golf Gourse Hotel recently. Dipan Shah, the Kiboko Financial Services boss, noted that the new supervisory regime will require levels of debt, liabilities, inflation and monetary policy in the computation of risk faced by insurance players.
“Risk-based supervision will make the local insurance sector as strong as insurance sectors in other countries on the international level,” he noted.
Bernard Sekabira, the Bank of Uganda director for commercial banking, noted that the new supervisory regime means that firms with less business could maintain lesser capital than those with more business.
By Samuel Sanya, The New Vision
