Judy Mugoya, country manager of Smart Applications International
Uganda’s private health insurance sector is walking a tightrope. Even as medical claims expenditure fell by 15% in the first nine months of 2026 to Shs115 billion, industry leaders warn that the sector remains under severe pressure from medical inflation, fraud and inconsistent billing practices.
The drop in total claims, driven by a 22% reduction in hospital visits and a 27% decline in unique patients, was revealed in Kampala during the joint release of the 2026 First-to-Third Quarter Medical Insurance Industry Report by Smart Applications International and the Uganda Insurers Association (UIA).
Experts caution, however, that the lower payout totals mask deeper structural problems. Patient care still accounts for roughly 70% of total claims expenditure, while unit costs for clinical treatment remain high.
Christine Nassuna, chairperson of the UIA, said medical insurance remains one of the highest-risk classes in the industry because of claims volatility, inappropriate utilisation and deliberate abuse.
“Medical insurance is a critical pillar of healthcare financing. It helps individuals, families and employers access care and overcome the financial burden of illness,” Nassuna said. She stressed that the industry can no longer rely on assumptions and must base decisions on reliable data and technology.
Christine Nassuna, chairperson of the UIA
The report highlighted wide price differences among healthcare providers. Some facilities recorded medical inflation rates well above the industry average. The same providers often charged different insurers varying fees for comparable outpatient services, with costs ranging from Shs113,000 to Shs152,000 per visit.
Rukia Barii, customer relationship manager at Smart Applications, said: “The data shows significant price variations for the same outpatient services across different insurers. This lack of standardisation, combined with the strong bargaining power of some hospitals, continues to push up claims costs and makes it harder for the industry to manage medical inflation.”
The report also revealed a heavy concentration of services in the Central region, which accounts for 79% of total patient traffic and hosts 69% of active network providers. This forces many upcountry policyholders to travel long distances for specialised care.
Dependants made up 51% of all patients served. Young adults aged 19 to 40 recorded the highest visit frequency, while senior citizens aged 60 and above posted the highest average cost per visit because of chronic disease management.
Underpinning these pressures is widespread fraud, waste and abuse. Insurers continue to battle systematic exploitation, including policies used for minor complaints, cash handouts and repetitive routine checks; duplicate same-day consultations; and collusion between providers and patients.
Traditional fraud detection methods, which rely heavily on manual reviews and post-payment audits, have proved too slow. Rigid, static rule-based systems struggle to detect coordinated behavioural fraud.
To address the problem, Smart Applications International has deployed Smart Detect AI, an artificial intelligence platform that tracks behavioural anomalies across Uganda, Kenya and Rwanda. The company also showcased its analytics and artificial intelligence-based solutions, including tools designed to detect unusual claims activity and support claims verification.
Judy Mugoya, country manager of Smart Applications International, said: “Technology and reliable industry data are essential if insurers are to identify unusual claims patterns early, improve claims management and make better decisions. Our analytics and AI tools are designed to detect suspicious activity and support more accurate claims verification across the network.”
Using historical data dating back to 2021, Smart Detect AI maps normal health-seeking behaviour and establishes clinical baselines for visit frequency, medication regimens and treatment protocols. It then flags abnormal deviations, including geographical hopping (accessing services in distant locations within hours), excessive visit frequencies, provider-member collusion and polypharmacy or medication misuse, which accounts for 30 to 40% of flagged treatment encounters.
When a suspicious transaction is detected, the platform generates an explainable flag that gives investigators clear reasons — such as frequency spikes or location inconsistencies — to act before claims are paid.
Smart Applications has also introduced pre-submission claim scrubbing. Hospitals often deliver services only to have claims rejected later because of documentation gaps, missing authorisations or protocol breaches. The AI tool evaluates claims before submission and provides a “payability” score, allowing providers to correct errors in advance.
The Q1–Q3 2026 report is based on medical claims processed through Smart Applications’ network, which covers about 902 healthcare providers across roughly 115 districts and serves an estimated 79% of Uganda’s medical insurance market. It therefore reflects activity within the company’s network rather than the entire healthcare sector.
The findings come as insurers seek ways to manage rising medical costs while maintaining access to quality healthcare for policyholders. By combining advanced data analytics, AI-driven fraud detection and more transparent pricing, the industry can protect underwriting portfolios while keeping medical cover affordable for Ugandans.
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