The Insurance Act, 2017 (the “Act”) has recently been enacted to reform the law governing insurance in Uganda. 

The purpose of the Act is to bring Uganda’s insurance law in line with the Insurance Core Principles (“ICPs”) developed by the International Association of Insurance Supervisors and the Financial Action Task Force recommendations on combating money laundering and countering the financing of terrorism. The ICPs form the basic internationally accepted standards for regulation of insurance companies and are the basis for assessment of insurance regulators’ compliance with accepted international best practice. The compliance is aimed at ensuring that Uganda’s insurance industry and its key players have structures in place, making Uganda a more acceptable destination for investors.

Key changes 

Licensing of insurers

The Act has introduced perpetual licensing. Once a licence is issued, it remains in force until it is suspended, varied or revoked. The fees chargeable will, however, continue to be payable annually. The circumstances under which a licence can be suspended, varied or revoked are provided in the Act, one of which includes an insurer’s failure to adhere to the capital adequacy requirements under the regulations to be made under the Act. 

Board of the Insurance Regulatory Authority of Uganda 

The Act establishes a board of directors to govern the Insurance Regulatory Authority (“IRA”). Membership of the board has been broadened to include the chief executive officers of the Capital Markets and Uganda Retirements Benefits Regulatory Authorities, as well as a representative from the Insurance Training College to represent the industry. Members of the board are to serve for a duration of six years.

The Act has expanded the board’s role to include the power of supervision of licensees on a group-wide and cross-border basis and cooperation with local and foreign supervisory authorities and law enforcement, as well as receiving and resolving insurance-related complaints, therefore improving the reporting and enforcement mechanisms in the insurance industry in Uganda, as envisaged under the ICPs.

Introduction of risk-based supervision

The introduction of risk-based supervision is a complete shift from the compliance-based form of supervision provided for in the old Act. This method of supervision is premised on establishing procedural controls, capital adjustments and maintenance of capital at a level adequate to support the insurance business. The Act requires all share payments to be fully paid up in cash, imposes restrictions on the distribution of dividends to companies not meeting the company capital requirements and all other prudential requirements, and prohibits an insurance company’s reduction of its share capital without the approval of the IRA. 

Insurance Training College

The Act establishes the Insurance Training College, replacing the Insurance Institute of Uganda under the old Act. The college will have a board appointed by the Minister of Finance, Planning and Economic Development and its role will be to receive and administer the insurance training levy to be applied to registration, training, examination of licensees, as well as certification of training programmes. Every person licensed under the Act is required to be a member of the college. The levy will be charged on policy holders at a rate determined by the IRA.

Priority of insurance claims at winding-up

The Act provides for the priority of insurance claims at winding-up, completely overriding the Companies Act and the Insolvency Act. Assets of an insolvent insurance company will first be applied to the company’s liabilities under insurance contracts, following the payment of the costs and expenses of winding-up. 

This novelty should be cause for concern for lenders to insurance companies, as it disturbs the settled preferred position of secured creditors. It is not clear whether the Act’s intention is to place policy holders ahead of secured creditors or general unsecured creditors only.

Corporate governance 

The Act has introduced more stringent corporate governance requirements for insurers. Insurers are required to establish and maintain an appropriate governance framework, with a separation of the insurer’s oversight function from management responsibilities, the apportionment of roles between shareholders, directors, senior management and key persons in control, and the requirement for the board members and senior management to satisfy the fit and proper persons criteria. The Act also requires every insurer to provide the IRA with the names and addresses of the board members, senior executives and technical personnel.

In addition, in order to ensure that every insurer has robust corporate governance mechanisms in place, the Act requires all insurers to put in place a risk management function, a compliance function, an actuarial function, an internal audit function and any other such control functions as may be specified in regulations.

Cross-border and group-wide supervision 

The Act allows for cross-border and group-wide supervision, which involves the review and evaluation of risks and the assessment of solvency on a group-wide basis. It gives the IRA the power to request the submission of group financial statements if a licensee is a member of a group of companies. It can further require that the group statements are audited by an auditor of the licensee or one authorised by the Institute of Certified Public Accountants of Uganda and approved by the IRA. 

Establishment of an ombudsman 

The Act provides for the establishment of an ombudsman to arbitrate complaints between licensees and the public. The nature of complaints and disputes subject to arbitration, and the procedures to be followed in the arbitration over these complaints, will be provided for under the regulations. The IRA will, in the interim, perform the functions of the ombudsman until its establishment.


The provisions of the new Act, if diligently followed, will streamline and improve the insurance sector and its compliance with internationally accepted practices. We look forward to seeing positive growth in the sector following these welcome changes.