Kampala. Insurance policies taken during election period or few months before the country goes to the poll, could cost you more than what you would incur.
Considering the uncertainty that comes with elections in Africa, industry players are unsure of how the election will turn out and looking at how they can hedge themselves from the shocks.
Election violence that rocked the neighbouring Kenya in 200708 is still very much alive in the minds of industry players, especially those with presenc and in the region as well.
As a result of that violence, some of these insurance firms were compelled to pay billions of Shillings in compensation after several claims of damaged properties and equipment emerged.
Although similar chaotic situations are not expected to happen in Uganda following the experiences of the previous four general elections, industry players seem to be driven by speculation.
In an interview with Mr Maurice Amogola, the chief executive officer of risk management firm, AON last week, it emerged the insurance firms in Africa tend to increase the prices of insurance policies by between 5 and 10 per cent, to hedge against election uncertainties.
He said: “In Africa, there is normally uncertainty towards elections. And that could raise the cost of insurance slightly.”
He continued: “But here (in Uganda), government has invested in security and that is important in assuring confidence especially of an investor.”
When contacted last week, the managing director of Gold Star Insurance, Mr Azim Tharani, said it is too early to get worried over that—election uncertainty and cost of covers. He said: “Most corporate companies already have their covers and policies in place. What remains to be seen is whether the (corporate companies) will do a renewal and this is something that will be obvious toward the end of the year or early next year.”
He continued: “Most of them may want to extend the cover to take care of political risks but as I said it’s too early tomake judgment the biggest problem would be for individuals rather than corporate companies.”
Insurance regulator’s view
The Insurance Regulatory Authority (IRA)ommunication officer, Ms Mariam Nalunkuma, said in an interview earlier in the week approaching an election year (2016) is not a justification for industry players to increase the premiums— the amount of money charged by an insurance company for coverage.
She said: “We don’t expect premium to increase because we do not envisage having election violence. Just look at the previous elections we have had—there was no violence so elections cannot be a factor to determine price changes.”
According to Ms Nalunkuma, unless the policy involved is directly related to elections otherwise a change in premium depends on economic growth.
SOURCE: Daily Monitor