Published on 28/02/2024
The Ministry of Finance has cautioned Parliament against recommending the allocation of all money collected from the Motor Third Party to the Ministry of Health to treat road crash victims, saying the creation of separate funds within the Government would make it difficult to manage.
The call was made by Henry Musasizi, Minister of State for Finance, while appearing before the House Committee on Health, where a proposal was made that the money collected from motorists through third-party insurance be channelled straight to the health facilities instead of going to the insurance companies.
As a principle and a position of the Ministry of Finance, we should manage all public funds in a consolidated manner; we collect all the money, put it in a basket called consolidated fund, and then meet Government obligation as appropriated by Government. We are against sub-division because it becomes difficult for us to run a treasury that is scattered: funds for health, funds for water, funds for HIV, and funds for roads. You can see, it makes our work difficult, said Musasizi.
The Minister informed the Committee that in the 2022/23 financial year, UGX 32 billion was realised from third-party insurance. Out of this, Stamp Duty amounted to UGX12 billion, and Valued Added Tax (VAT) was UGX 3 billion. The practice has been that the money collected through Stamp Duty and VAT form part of Government revenue, which goes to the Consolidated Fund to finance the national budget while the balance remains with the insurance companies to compensate those who would get injured through road accidents injuries.
What we can welcome is if there is inadequate funding, can we argue along these lines, can we get ways of funding health better if there is a gap which must be closed? This money we are collecting, you can realise, Stamp Duty and VAT is only contributing Shs15Bn if we said we would give you UGX 15 billion, my question is, what would Shs15Bn do compared to the overall health budget? added Minister Musasizi.
The Minister’s remarks were in response to a concern raised by Committee Chairperson Dr Charles Ayume as the meeting discussed how money collected through motor third-party insurance can be used to treat road crash victims and the criteria that can be followed for the victims to pursue compensation from the insurance companies.
It is clear that most of us don’t know what third-party insurance is and where it goes. Let us know how much is generated annually in terms of third-party insurance. Can we also make proposals and see whether some of this money can be used in the health sector where it is needed more? If so, do most of us claim third-party insurance? There is a lot of mystery shrouded in third-party insurance. I know how much we receive, and we aren’t anywhere near half of that; we require UGX 350 billion annually, which is the projected cost if we are to treat all the cases of accidents; now, we don’t receive that amount of money, said Ayume.
Responding to Minister Musasizi’s remarks, Ayume said that the Committee had wanted a clarification on the distribution of the money realised from the Motor Third Party Insurance.
The Minister has highlighted the figures; on our side, we thought they were astronomical, but you can clearly say they are paltry, saying Shs5Bn is what they take to the consolidated fund, and that isn’t anywhere near what we expect to run the sector, I really understand your pleas, he stated.
Genesis of the issue
This meeting followed a January 2024 proposal made by Dr Timothy Batuwa, Jinja West Division MP, who informed the Budget Committee of the need to align money collected from motor third-party insurance with the health budget emergency medical services. He argued that although this money is intended for Ugandans who were involved in an accident, many victims are using their funds to seek treatment without receiving compensation from the insurance companies.
This money can be aligned to where the victims are going rather than giving it to a business person who will wait in his office for you to be treated and recover, and then you can come and claim. When you don’t claim, that becomes his money. So, we are looking at it as a low-hanging fruit that can be taken advantage of by the health budget, Dr Batuwa said then.
Dr Batuwa also proposed conditions on which particular departments within the health sector the money should go to.
We don’t want everyone in health to put their fingers on this money; we want it to go directly to the emergency health services; this is a department that oversees ambulances; with this money, we shall not hear that there is no fuel in ambulances because the nature of ambulances, you just need a vehicle to just move straight to the scene and evacuate those that are affected, added Dr Batuwa.
He also said that there are no adequate medical supplies in health facilities where victims of accidents are rushed in critical conditions and in a state of unconsciousness.
I picture these people lying down on the floor, doctors waiting for them to become unconscious such that they tell them what they need and they bring, and I believe somebody can die, and it is that careless death that is making us think outside the box, he emphasised.
Meanwhile, the Minister of State for Transport, Fred Byamukama, decried the numerous cases of fraud in the issuance of cash from motor third-party insurance, saying that many victims of road crashes struggle to access compensation for the injuries faced, hence, insurance companies pocketing the proceeds.
Fraud in motor third party insurance leaves many victims of third-party insurance leaves many victims of road crashes not covered, especially the COMESA (Common Market of East and Southern Africa) Yellow Card following the integration of the automated licensing system for the Ministry of Works and Transport and the IRA system. It was discovered that almost 80 per cent of the COMESA stickers were forged. Insurance claim officers, in a bid to save costs for their companies, import all manner of clauses and arguments that will deny their victims their right to claim, the Minister said.
The Minister called for the need to streamline the process of motor third-party claims to make it as convenient as possible for all road users in order to access the compensation.
The government should set up a road accident fund in order to administer the system of compensation for damages suffered due to bodily injuries due to the road crash. The fund will be financed by a levy on all the fuel consumed, Byamukama added.
Kenneth Akiiri, Under Secretary, Ministry of Health, informed the Committee that according to the Health Performance Report 2023, road traffic injuries were the 5th leading cause of death in hospitals.
He added that 45 per cent of the patients attending casualty units in referral hospitals in the country are due to road traffic injuries and that 80 per cent of orthopaedic wards at referral hospitals are occupied by road traffic victims.
In 2021/22, Mulago Hospital report shows that 400 patients of road trauma ended up in intensive care units in Mulago, and 83 per cent of these are males. The cost of treatment that doesn’t require surgery is estimated at UGX 3.9 million per victim, and once surgery is involved, this cost escalates to UGX 13.6 million. So, the average length of stay at the hospital for minor injuries is two days, while for major injuries, we are talking about one to two weeks for a single organ injury. Where you have severe injuries, patients take up to four weeks, while the critically ill take between one to three months [especially] where there is a severe brain injury and where there is need for Intensive Care Unit, explained Akiiri.
Sande Protazio, Director of Strategy and Market Development in the Insurance Regulatory Authority of Uganda, told the Committee that claims of Motor third-party insurance by accident victims have remained too low due to a lack of awareness and low limits of payments noting that the insurance company can only pay up to UGX 10 million per one accident victim, while in cases of few victims, each victim is paid not more than UGX 1 million, thus the need to amend the law in order to increase payments.
He added that although Motor third-party insurance is a mandatory requirement for all vehicles, save for Government vehicles, but figures from the Insurance Regulatory Authority indicate that only 700,000 vehicles are currently insured out of 1.8 million motor vehicles in Uganda. He attributed this to gaps in the law that exclude Government vehicles from mandatory Motor third-party insurance.
A September 2020 report on the Status of Motor Vehicle Insurance In Uganda revealed that out of the total insured vehicles in the country over the five-year period (1,375,763), 1,174,483 vehicles held MTP policies while 201,280 vehicles had MCP policies (representing 85 per cent and 15 per cent respectively) and by the end of 2019, the annual total premiums had reached UGX 140.5 billion from UGX 69.8 billion recorded in 2015.
The report added that out of an estimated 1.54 million vehicles, only about 418,117 are insured, leaving a balance of 1,121,883 uninsured, and the average insurance premium (VAT inclusive but Stamp duty exclusive) is about UGX 41,000, while the average premium net of 18 per cent VAT is thus about UGX 34,746 per policy.
The Regulator noted that Government direct losses from non-compliance are estimated at UGX 42.3 billion, out of which UGX 39.26 billion is from stamp duty, while the insurance industry loses an estimated UGX 39 billion from non-compliance.
