The Motor Third-Party Liability Insurance Project in Uganda

Project Development Objective (PDO)

This objective of this project is to develop an actuarial model for and to improve regulation of motor vehicle insurance in Uganda. These efforts are intended to promote and secure a sound and stable insurance market in Uganda for the benefit and protection of both policyholders and insurers.


Uganda suffers one of the highest rates of traffic accidents in Africa. Although many factors would need to coalesce to reduce such high incidence of traffic accidents, motor vehicle insurance has the potential to be a powerful tool for the promotion of personal responsibility. Effective communication of the consequences and costs of causing a traffic accident will gradually lead to improved driving in Uganda. 
Motor vehicle insurance (third-party risks) dominates Uganda’s small non–life insurance market. Several actors, including the fact that it is compulsory, make motor vehicle insurance the most frequently purchased class of general insurance in Uganda. Despite recent growth in the industry, Motor Third-Party Liability (MTPL) insurance is still a small sector, although it has significant potential to bring about positive social change. MTPL insurance is statutory in Uganda, and the Ugandan government is in charge of setting the maximum price for insurance premiums. Unfortunately, Uganda’s current regulations for motor vehicle insurance set compensation limits in such a way that does not allow for adequate compensation of third parties affected by traffic accidents. Given these circumstances, it is critical for the project team to (a) review legislation that regulates motor vehicle insurance in Uganda and (b) make appropriate changes to set realistic compensation levels and to increase policyholder protection.


The project team aims to perform the following activities:
1.  Creating an actuarial model for (a) setting premiums and compensation levels and (b) calculating
     the capacity of the Ugandan Insurance Regulatory Agency (IRA) to use the model and to set
2.  Drafting a revised Motor Vehicle Insurance (Third-Party Risks) Act, Cap. 214 (2000) in line with 
     (a) harmonization efforts of the East African Community’s Common Market Protocol, (b) 
     international best practices, and (c) opinions of the IRA and market participants    
3.  Revising Motor Vehicle Insurance (Third-Party Risks) regulations (2000); consulting with the IRA
     and with market participants on the new legislation

Expected Outcomes

The main expected outcomes of this project are as follows:
Changes at the enabling environment level
1.  Increasing the capacity of the IRA to set and regulate the actuarial sound premium, compensation
     level, and technical reserves 
2.  Developing a stronger legal and regulatory framework for the motor vehicle insurance sector that
     aligns with the East African Community’s Common Market Protocol and with international
Changes at the sector level
1.  Adjusting premiums of MTPL insurers by using the recommended actuarial model; setting
     technical reserves, settling claims and disbursing compensation appropriately and in accordance
     with new laws and regulations
2.  Improving claim-paying performance, which will improve the sector’s image and provide real
     policyholder protection
3.  Deepening and strengthening the MPTL insurance market through greater consumer confidence
     and stronger legal and regulatory enforcement