Regulator sets new indicative insurance rates for vehicles

Tanzania Insurance Regulatory Authority (Tira) Commissioner of Insurance Baghayo Saqware addresses a news conference in Dar es Salaam on Monday. Left is Tira Licensing Manager Issa Kissongo. Photo | Salhim Shao

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Insurance premiums are forecast to reach Sh743.7 billion this year, up from Sh670 billion and Sh595 billion in 2016 and 2017, respectively, the insurance commissioner at Tira, Dr Baghayo Saqware, revealed yesterday. However, the sub-sector has been plagued by cut-throat competition with players setting diverse rates.


Dar es Salaam. The Tanzania Insurance Regulatory Authority (Tira) yesterday released indicative rates for motor vehicle premiums as it seeks to bring sanity into the sub-sector.

Insurance premiums are forecast to reach Sh743.7 billion this year, up from Sh670 billion and Sh595 billion in 2016 and 2017, respectively, the insurance commissioner at Tira, Dr Baghayo Saqware, revealed yesterday. However, the sub-sector has been plagued by cut-throat competition with players setting diverse rates.

“The new system became effective on July 1, 2018. It is a response to complaints from various stakeholders,” Dr Saqware said, and calling upon all 31 insurance companies operating in the country to comply or face legal measures.

Under the new arrangement, the indicative minimum rate for comprehensive motor vehicle insurance cover will be 3.5 per cent of its value, while for a used motor vehicle is four per cent of its current value (after depreciation).

Last year, Parliament approved the Written Laws Miscellaneous Amendments) Act 2017 which, among other things, amended the Insurance Act, Cap 394 with a view to empowering the Commissioner for Tira to streamline premiums charged by various indemnity (insurance) firms in the country and set minimum and maximum charges.

“The aim is to do away with the current system whereby insurance agent charge premiums haphazardly,” Constitutional and Legal Affairs minister Palamagamba Kabudi told the House in Dodoma.

Apart from the law, Tira, the Tanzania Insurance Brokers Association and insurance firms conducted their own researches at different times and established the need to come up with a mechanism that would regulate prices in the industry.

According to the commissioner setting the prices was one of the initiatives that Tira was undertaking in the endeavour to ensure that at least 50 per cent of adult Tanzanians have access to more than one insurance product in ten years from now. Currently, it is only 15 per cent of adult Tanzanians who have access to more than one insurance product.

It is hoped that the indicative prices will allow insurance companies to improve their businesses and thus raise their capital and be in a position to compensate their clients when the need arises.

The current indicative prices – which are also meant to make it easier for local companies to disperse risk indicators as they continue to serve the public – will remain legally-binding for a period of five years but that changes would be initiated in line with emerging challenges.

In September, this year, Tira will also issue indicative prices that will be followed when compensating victims of accidents involving insured motor vehicles.

“This area has a lot challenges because if someone is involved in an accident, it is the vehicle owner who decides how much to give to the victim as compensation. This is not right,” said Dr Saqware.

The authority is also finalising the process of introducing the National Insurance Policy so that farmers can also seek insurance cover. The status of the implementation is currently being reviewed by the Minister for Finance and Planning. The acting director of legal enforcement at Tira, Ms Margaret Mngumi, said insurance companies must comply with the orders in line with the Insurance Act No. 10 of 2009.