Wakilii

Topical Bank Limited v Goldstar Insurance Company Limited (Appeal 4 of 2023)

Tribunal · [2024] UGIAT 1 · 2024 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of Insurance Regulatory Authority directing payment of insurance premium
Decision
Appeal dismissed; IRA decision directing payment of UGX 25,973,924 prorated premium upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that a valid insurance policy existed between the parties despite non-payment of premium because the Insurance Regulatory Authority had issued a circular deferring premium payment requirements during the COVID-19 pandemic. The insurer was entitled to prorated premium for the three-month period during which the insured was on cover under the regulatory deferral. Section 63(1) of the Insurance Act 2017, which requires premium payment as a condition precedent, was suspended by the regulator's circular during the relevant period.

Outcome

Appeal dismissed; IRA decision directing payment of UGX 25,973,924 prorated premium upheld

Facts

On 31 December 2020, Tropical Bank awarded Goldstar Insurance a contract for Group Personal Accident Policy for 2021. Goldstar issued the policy effective 1 January 2021 to 31 December 2021 and a debit note. Due to COVID-19 restructuring, the Bank requested prorated premium for staff reductions by 8 February 2021. Goldstar issued a revised debit note. The Bank assured payment within three weeks but later wrote on 29 March 2021 stating it would not contract Goldstar's services. No premium was paid. Goldstar complained to the Insurance Regulatory Authority, which found the Bank liable for three months' prorated premium of UGX 25,973,924. The Bank appealed, arguing no valid policy existed without premium payment.

Issues

  1. Whether there existed a valid insurance policy between the Applicant and Respondent.
  2. Whether the Applicant is liable to pay the Respondent the premium claimed by the Respondent.

Orders

  • Application disallowed.
  • Decision of the Insurance Regulatory Authority upheld.
  • Each party to bear the costs of the appeal.

Rules and key headnotes

Insurance — Premium Payment — Effect of Regulatory Deferral During COVID-19
Where the Insurance Regulatory Authority issues a circular deferring the termination, cancellation or lapsation of insurance policies due to non-payment of premiums during the COVID-19 pandemic, an insurer may lawfully place an insured on cover and defer premium payment without contravening Section 63(1) of the Insurance Act 2017.
Insurance — Premium Payment — Condition Precedent to Validity
Under Section 63(1) of the Insurance Act 2017, payment of premium in full on or before the date of inception or renewal is a condition precedent to a valid insurance contract, and unless premium is paid in advance there can be no cover for an insurance risk on a 'no premium no cover' basis.
Insurance — Premium Payment — Liability for Period on Cover
Where an insured has been on cover under a valid insurance policy for a period during which premium payment was deferred by regulatory circular, the insured remains liable to pay prorated premium for the period of cover actually enjoyed.
Statutory Interpretation — Regulatory Power to Suspend Statutory Requirements
The Insurance Regulatory Authority's power under Section 63(2) of the Insurance Act 2017 to make regulations to regulate premium payment includes the power to issue circulars suspending the operation of Section 63(1) in exceptional circumstances such as a pandemic.

Legislation cited (4)

Cases cited (10)

  • SPS ANTONIO A TIRAY and VIOLETA R. TIBAY and OFELIAM RORALDO, VICTORINA M. RORALDO, VIRGILIO M. RORALDO, MYRNA M. HORALDO ROSABELLA M. RONALDO VERSUS COURT OF APPEALS and FORTUNE LIFE AND GENERAL INSURANCE CO., INC (G.R. No. 119655 May 24, 1996) Supreme Court of the Republic of Philippines
  • Henry J.Klein, Administrator of Natalie Lisiewicz Klein v Avemco Insurance Company 220 S.E 2d 595(1975) 289 N.C 63
  • Makula International Limited v His Eminence Cardinal Nsubuga & Rev. Dr. Father Kyeyune (Civil Appeal No. 4 of 1981)
  • Suffish International Food Processors (U) Ltd and Another v Egypt Air Corporation T/A Egypt Uganda Ltd (SCCA No. 15 of 2001)
  • Chartis Philippines Insurance Inc. (Now AIG Philippines Insurance Inc.) Vs Cyber City Teleservices Ltd (G.R No.234299 of 2021)
  • Abdul Azeez & Co. v National Insurance Co. Ltd AIR 1954 Madras
  • Parsons Transport Ltd v Global Insurance Company Ltd 345/04
  • Charles Lubowa v Makerere University (SCCA No. 2 of 2011)
  • Pan African Insurance Company (U) Ltd v International Air Transport Association (HCCS No. 667 of 2003)
  • New India Assurance Co Ltd v Rula & Ors

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Topical Bank Limited v Goldstar Insurance Company Limited (Appeal 4 of 2023) [2024] UGIAT 1 (31 January 2024)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.