Why uptake of insurance is still low in Tanzania

Despite having many insurance service providers in Tanzania, only a fraction of the country’s population knows about the importance of insurance and its integrated activities for the country’s economy.

The insurance business in Tanzania has not yet ventured into rural areas where the majority of Tanzania citizens live because the sector is not yet given the weight it deserves by key stakeholders in the country.

Following the liberalization of Insurance sector in Tanzania which came into being in mid 1990s, the country has realized the emergence of various Insurance companies, brokering houses and agencies flocking the market.

There are also a number of registered insurance brokers whose main activities are independent to conversing business and advise clients regarding insurance activities. Apart from Insurance brokers, there are also more than 200 insurance agents who do the work of insurance companies but only on behalf of the principals.

Insurance brokers are among the fast growing and most active in executing insurance activities. With its vast and unparalleled expertise in the market and partnership with reputed Insurance companies, most of them have an added quality in its flexibility and being well equipped.

This makes brokers to promptly and efficiently provide a wide spectrum of quality insurance services, customized to meet the clients’ requirements at the best possible terms.

This quality driven approach encompasses all phases of the Insurance cycle, from the initial assessment of risk and client’s needs to the final follow-up and settlement of claims.

Measures put in place by the Tanzania Insurance Regulatory Authority (TIRA) are very promising with intent to explore the future of the insurance market in Tanzania in order to match with the emerging global business trends.

TIRA’s Commissioner of Insurance Dr. Bagayo Abdallah Saqware, attributed the rising of the economic indicators which signals that the country is performing well, with major investments which are taking place to ensure the industrialization program becomes successful.

Such investments opportunities can be found in mining, oil and gas, tourism, banking, real estates as well as transportation and communication sectors respectively.

He further says that, most public parastatals are in full capacity production compared to the situation before. Export and import play a major part and hence there is a need to a strategy based on increased self-reliance in insurance.

To avail the use of the information technology in insurance activities, most Insurance brokers in Tanzania, have installed relay business software solutions capable of offering online insurance services.

With this software, a client can get instant online insurance quotations from the registered Tanzanian Insurance companies. A client can propose an insurance cover online as all proposal forms are provided there in. This State-of-the-art network increases the ability to respond quickly to client’s needs and thus consolidates the competitive edge.

Tanzania insurance companies offer services broadly in respect of standard as well as special insurance needs and solutions. It indulges in aggressive and effective bargaining with insurers in a competitive insurance market.

The prime and foremost consideration is to crystallize a balanced and cost effective insurance portfolio for clients, leading them to adopt ideal insurance sense and ultimate peace of mind.

Although the insurance systems in the country continues to grow, up to now the sector contributes to 1.68 per cent to the Gross Domestic Product (GDP) against its projections to 2 percent in order to match with neighboring countries such as Kenya.

As all the guidelines on insurance activities are compiled by TIRA, he noted the most championing business in this sector together with the international markets which promotes the development of the sector.

In view of this, however there is a great need of the insurance companies to continue curbing the many constraints facing the sector that are emanating due to external forces on prices and cheatings.

According to Saqware, the insurance sector has a great significance in promoting the national economy and the liquidity of the financial resources, hence is a stimulus towards poverty alleviations strategies.

As of December 2021, the Tanzanian insurance sector consisted of 32 insurance companies, 109 insurance brokers, and 635 insurance agents.

He cited businesses sectors of mining, gas, all kinds of transport infrastructures such as marine, air, road and railways, therefore these are incentives to be looked at and supported in high levels by insurance companies for indemnity to prospective investors and stakeholders in general.

Key industry players say that, “there is a need to take concrete action to promote the Insurance industry in Tanzania.

They suggest that there is a need to have strategy based on increased self-reliance in the insurance industry.

This is to enable build a strong and capable insurance industry and in doing this, some of the unnecessary conditions imposed on the sector should be rectified to match with the current situation. 

“The government should allow the expansion of the sector in a wider range so as to create more employment in the country”, says one retired expert of the industry.

Zebedayo Kidugwa who joined the sector few years after the independence in an interview in Dar es Salaam singled out actions to be taken including the prohibition of insurance of domestic risk abroad.

According to him, the bulk of the insurance risks generated by the country’s economic activities and properties based in Tanzania as well as liability of their risk should only be insured with insurance companies duly licensed in the country.

This could be incorporated in the Tanzania Investment blue-print by the Tanzania Investment Centre (TIC), he suggested, adding that the necessity for exceptional cover abroad could be reduced by re-insurance arrangement or establishment of a national insurance pool.

More intensive use of compulsory insurance classes should be envisaged where appropriate and marine cargo insurance of imports should be locally covered.

Regulations should also be issued prohibiting banks from issuing letters of credit unless a certificate of insurance to be issued by a Tanzanian insurer is produced.

According to him, Insurance should be diversified and encouraged to include new and profitable classes of businesses particularly those of great importance to the economy of the country.

Following continued competition, it is therefore a responsibility of all insurance companies to venture into new products such as pollution, insurance computer professional indemnity, Legal expenses and insurance for agricultural crops.

H is of the view that, Tanzania’s Insurance sector has strengthened its roots but not much further as more education is highly required to enlighten people on the importance of the insurance and how it covers remedies.