Uganda’s insurance industry is considering the creation of a shared fraud database as part of efforts to counter increasingly sophisticated scams that are raising costs and undermining trust among policyholders.
Industry leaders say insurance fraud is evolving rapidly, with criminals deploying advanced technologies such as artificial intelligence (AI) to forge documents, fabricate evidence and execute complex schemes that are difficult to detect through traditional verification systems.
Speaking recently at the 67th CEO’s breakfast meeting held in Kampala, the chairperson of the Uganda Association of Engineering Valuers and Loss Assessors (UAEVLA), Geoffrey Sewakiryanga, warned that fraud in the insurance industry is no longer limited to simple exaggerations of claims.
“Fraud has moved from individual [claims] exaggeration to organised networks; from paper alteration to digital forgery; from localised schemes to cross-border operations, and from simple inflation to AI-enhanced evidence. With AI, criminals can create realistic deep fakes, forge documents, identities and signatures,” Sewakiryanga said.
The meeting, organised by the Insurance Regulatory Authority (IRA), examined the future of insurance claims management in light of increasingly organised and technologically sophisticated fraud schemes.
According to Sewakiryanga, the industry must rethink its approach and shift from reactive responses to proactive systems capable of detecting fraud before claims are paid out.
“If fraudsters use technology, so must we. Let us embrace AI-driven fraud detection, use real-time claim analytics, drone inspections, shared fraud databases and blockchain-secured documentation,” he said.
Growing cost of fraud to the industry
Industry experts say the financial and reputational consequences of fraud are significant.
Sewakiryanga explained that fraud “leads to higher loss ratios, increases premiums, delays genuine claims settlements, results in litigation costs, erodes customer trust and damages industry credibility, especially due to disputed claims or prolonged investigations.”
These outcomes, Sewakiryanga stressed, ultimately weaken the sector’s credibility. A report by KPMG East Africa shows the scale of the problem in Uganda’s insurance market.
According to the report, fraud adds about 10% to each insurance premium paid by policyholders. “Insurance fraud is a real risk in today’s business environment, and businesses of all sizes can find themselves a target,” the report notes.
This cost is eventually passed on to consumers through higher premiums, making insurance products less affordable and weakening public confidence in the sector.
Shared fraud database
To counter these emerging threats, industry leaders are proposing collective action, including the creation of a shared fraud database that would allow insurers to track suspicious claims and detect patterns of fraud across companies.
Chief executive of IRA, Alhaj Ibrahim Kaddunabbi Lubega, said the increasing scale and sophistication of fraudulent claims requires co-ordinated responses by all stakeholders in the insurance ecosystem.
“Claims management remains the ultimate test of insurance credibility. Fraudulent claims are not only eroding trust in the industry, but they are increasing the operational costs, reducing efficiency, and ultimately disadvantage the policyholders or customers we are serving,” Lubega said.
He noted that the industry should accelerate the implementation of a fraud data-sharing strategy already outlined in the strategic plan of the Uganda Insurers Association (UIA).
The proposed system would enable insurers to share information on suspicious claims, fraudulent actors, and patterns of abuse across the industry, making it easier to detect organised fraud networks.
Lubega also called on insurers to strengthen underwriting processes at the time policies are issued to avoid disputes later during claims settlement.
He said proper underwriting at policy inception is essential because failure to verify risks early often results in conflicts during the time of processing claims.
The chairperson of Uganda Insurers Association, Ruth Namuli, confirmed that steps are already underway to establish the shared fraud database in partnership with the regulator.
Namuli said the association, in collaboration with the IRA, is in the process of implementing the establishment of a shared fraud database.
She added that the fight against fraud will also require stronger professional standards and governance within the industry.
Namuli emphasised the need for professional competence, ethical conduct, effective internal dispute resolution mechanisms, and strong governance frameworks to curb fraudulent practices.
Fraud cases worrying
Recent data from the IRA shows that while the number of fraud cases detected may appear relatively small, the financial implications remain significant.
During the second quarter of 2025, the fraud investigations unit at the regulator registered four suspected fraud cases valued at UGX449.7 million (approximately US$124,917).
Two of those cases involved motor insurance, including one incident where an insured motorist presented forged policy documents.
Although the number of cases recorded during the quarter was limited, the regulator noted that the value at risk revealed weaknesses in claims verification processes and document authentication systems.
Historical data also indicates that insurance fraud has been increasing over the years. Statistics from cases reported to the IRA show that fraudulent practices totalled UGX4.93 billion (approximately US$1.33 million) in 2019, up from UGX3.06 billion (about US$821,031) in 2018.
Fake policies and forgeries accounted for UGX325.75 million (close to US$87,945) between January and September 2019 compared to UGX223 million (approximately US$59,833) recorded in 2018.
Credit bond guarantees accounted for the largest portion of fraud cases, with figures rising to UGX3.65 billion (approximately $985,416) in 2019 from UGX1.2 billion (about US$321,973) in 2018.
According to Protazio Sande, the director of planning, research, and market development at the IRA, these trends highlight the urgent need for stronger safeguards. Sande said the rising value of fraud cases reinforces the need for stronger fraud detection systems, closer collaboration among institutions, and greater public awareness.
AI as opportunity and risk
Industry leaders say artificial intelligence is reshaping the financial sector, including insurance, offering new tools for improving efficiency but also introducing new risks.
Speaking about emerging industry trends, Stanbic Bank Uganda CEO Mumba Kenneth Kalifungwa said AI is transforming financial services by enabling innovations such as automated claims processing and personalised insurance services.
However, he noted, “While AI offers enormous efficiencies such as hyper-personalisation, automated claims and fraud detection, it also introduces ethical concerns.”
In addition, he cautioned that algorithmic bias and opaque decision-making processes could worsen financial exclusion and weaken public trust if not carefully managed. To mitigate these risks, he called on insurers to adopt explainable AI frameworks and establish ethical review boards to oversee high-impact algorithms.
Kalifungwa said such safeguards would ensure that technological innovation does not undermine fairness or transparency.
Cybersecurity as industry priority
Beyond fraud detection, experts also emphasise that cybersecurity must become a central capability for insurers operating in an increasingly digital environment. The projected growth of Africa’s digital economy of US$712 billion by 2030 presents both opportunities and challenges, particularly as AI adoption in financial services approaches 30%.
Current regulatory structures remain inadequate to address cutting-edge innovations like blockchain and AI-powered underwriting solutions. Furthermore, the sector faces a human capital crisis, with traditional leadership approaches proving increasingly inadequate in today’s volatile operating environment.
Kalifungwa said strong data governance practices are now essential to protect both clients and institutions. “In an increasingly digital ecosystem, robust data governance is non-negotiable,” he said.
He urged insurers to adopt cybersecurity architectures that incorporate encryption, multi-factor authentication, and regular penetration testing. Kalifungwa also called for strict cybersecurity standards across third party providers and Insurtech partnerships, noting that weak links in digital ecosystems can expose insurers to major risks.
Transparent data stewardship policies, he added, will be critical in rebuilding client confidence and protecting institutional credibility.