Yemisi Izuora/Agency Report
Despite being among the fastest growing insurance industry in Sub-Saharan, Africa, Tanzania’s insurance market is still very low compared to other countries in the region, a report has indicated.
Ernest and Young Global Insurance organization current report shows that, the sector’s annual growth stands at 7.9 per cent while the premium per capita accounts for $6 per year. Kenya uses $40 premium per capita.
Tanzania’s pace of growth is ranked in fifth place ahead of Malawi and Kenya, Zambia , Nigeria and Ghana.
Speaking to reporters in Dar es Salaam the Country Director, Mr Joseph Sheffu, attributes the situation to historic reasons and effects of AIDS which had lowered life expectancy to the extent of scaring major foreign insurance companies to venture in the market.
He said economic policies pursued from late 1960’s to 1990’s had undermined growth of the private sector and restricted the market to the public owned corporation.
He said he was optimistic that it would take only a short time for the market to grow and compete with her peers in the region because of its great potential.
According to the survey, insurance sector in the country contributes 0.9 per cent GDP income mostly generated from non-life insurance products.
On life insurance products, the sector contributes 0.1 per cent. In Kenya life insurance accounts for 1 per cent GDP and 2 per cent in non-life policies.
“The report shows that many Tanzanians do not use insurancies especially the life insurance products” he said adding that the situation calls for massive investment considering the availability of market opportunities in the sector.
It also calls for government and insurance regulators to come up with policies that will help to promote investment in insurance sector in order to develop the market towards income generation.
“Apart from that, insurance companies ought to use technology innovation in order to enable fast penetration of insurance products for both life and non-life products in Tanzania, ” he noted.
According to the report, insurers in Tanzania are responding to the demands of technology change through innovation. On The Other Hand, Mr Sheffu cited other historical and education, policies distribution as among the challenges that face the market promotion in the sector.
The report that aimed at examining the growth potential for insurance sector in Region, surveyed 125 companies and regulators in sub-Saharan Region in seven countries including Malawi, Uganda, Zambia, Nigeria, Ghana and Tanzania.
A report by Insurance Intelligence Centre says Tanzanian insurance industry is in a growth phase, and a large proportion of the population is untapped. The industry registered review-period (2009-2013) compound annual growth rate (CAGR) of 18.8 per cent.
The growth was due to the strong performance of the life segment, which registered a review-period CAGR of 22.2 per cent . The segment registered review-period CAGR of 18.8 per cent, while the non-life insurance segment registered a CAGR of 18.4 per cent.
The industry’s growth was supported by efficiency in the regulatory structure, economic stability, and the rising customer awareness of the benefits of insurance.
The industry was served by 28 insurance companies, including reinsurers, as well as 79 brokers, 260 agents and 39 loss assessors and loss adjusters as of 2012.
Health insurance is booming in Tanzania. Its gross written premium represents 57.7 per cent of the total personal accident and health insurance segment’s share, the report says.