Dar es Salaam. Since bancassurance - the selling of life insurance and other insurance products and services by banking institutions - was launched in Tanzania, only 13 out of over 50 commercial banks in the country have been granted licenses to operate the scheme.
Some of the 13 banks include: NMB Bank Plc, Diamond Trust Bank (DTB), National Bank of Commerce (NBC), Absa and Maendeleo Bank.
The specific goal for the Tanzania Insurance Regulatory Authority (Tira) and the Bank of Tanzania (BoT) to introduce the bancassurance scheme was to ensure that many more Tanzanians have access to insurance products and services across the board.
Since then, there has been increased competition among the banks in seeking to attract customers for insurance – doing so mainly through advertisements via mass media.
Tira’s quarterly performance report for the period from January 1 to March 31 2019 shows that the insurance market grew by 15.2 percent in terms of gross premiums written, reaching Sh237.4 billion.
The general insurance business recorded a growth of 14.6 percent in gross premiums written during the period under review – rising to Sh212.018 billion. And, the life assurance business volume increased by 20.9 percent, to Sh25.3 billion.
Speaking to The Citizen, the Tira Corporate Communications manager, Eliezer Rweikiza, said 13 banks have already introduced bancassurance products and services in their business programmes.
“We have seen great progress, and penetration is increasing – although I can’t here say by what percentage. But, there is definitely a positive change,” Mr Rweikiza said.
“Bancassurance has helped to increase employment for young people who studied insurance. In order for the banks to take up bancassurance, they must have qualified personnel to service the business,” he said.
Bancassurance has also fueled competition in the market as banks and insurance companies are all rushing to sell the products and services.
According to the law, the banks are allowed to work with only ten insurance companies at a go.
Comments from insurance firms
First Assurance Company chief executive officer Rogation Selengia said the company is currently working with three banks – and will soon add two more, as bancassurance is steadily proving to be lucrative.
“This product is proving to be good for the insurance companies - especially because the banks are doing a good job of selling the product. But there is the challenge of financing for a number of the banks…
“Hopefully, things will get on the right track soon enough,” Selengia said – hastily adding that some insurance brokers are currently having a hard time from the stiff competition being posed by banks that have taken up bancassurance.
Sanlam Life Insurance’s bancassurance manager, Krispiana Shirima, said the launching of bancassurance has helped insurance products and services to reach much of the country on the back of the large number of bank branches across the land.
“For example, we are working with banks that have branches across the country – and, so, insurance companies do not have to set up branches where these banks already have branches.
“So, we have increased the number of customers since launching bancassurance. We are currently working with at least five banks – and by the end of this year the number will grow,” she said.
However, the bancassurance scheme notwithstanding, there is still the challenge of mastering the tricks of the trade, and insurance firms are already collaborating with banks in training bank officials who can then educate customers on the issues involved. She stressed the need for banks and insurance firms to cooperate in increasing penetration of bancassurance products and services in the years to come.
What banks say
DCB Commercial Bank’s Investment and Corporate Banking director Zachariah Kapama said the bank, which is listed at the stock market, has not yet officially taken up the bancassurance business.
This is despite the fact that the lender has already secured approvals for this from the Bank of Tanzania (BoT). However, he revealed that they were still finalizing some procedures so they could apply for the required licence from the insurance authority. Noting that bancassurance basically has a huge potential for the banks to increase their incomes and number of customers, he said this is still in the future.
“According to the Bancassurance Act, a commercial bank is allowed to enter into an agreement with 3 to 10 insurance companies – and all are required to open an account at the relevant bank for depositing insurance premiums paid by customers. So, there are many opportunities for us as well,” Mr Kapama stated, oozing confidence.