Premium financing, a specialised form of lending for health and insurance covers, has been launched in Uganda by AAR Credit Services (AAR C.S).

At a colorful cocktail launch at the Nile Conference Centre recently, AAR C.S officials said customers will not need to provide collateral security for the one year cover.

“The only security is the first installment with cash or current cheque. Then we pay to the insurance company of your choice for a one year cover,” said Mr. John Kariuki, AAR C.S Managing Director.

Mr. Kariuki said the service will be for both individuals and corporates. The firm has been operating in Uganda since May.

“The other edge is that when you come with a big initial premium installment, we lower the interest rates.

“The fewer the payback installments, the lower the rates,” said Mr. Kariuki.

On default procedures, he said if a client defaults in paying back, AAR directs the insurance firm to cancel the cover.

AAR C.S is looking to tap into the over 9,000 clients of AAR Health Services, according to Mr.Kariuki.

In whole of East Africa, there are about 100,000 clients. “Most clients in East Africa. The default rate has been 2.5-3%, which is excellent,” Mr. Kariuki said.

AAR C.S is licensed as a money lender and 40% of the stakes are owned by a local partnership of Ugandan businessmen Mr. Bob Kabonero, Mr. Patrick Bitature and Mr. William Byaruhanga. The other 60% is owned by Kenyans.