Who is who in the insurance industry

This week’s article seeks to help you understand the insurance market by providing you with information on how the insurance market in Tanzania (as is in most jurisdictions) is structured and how it operates. This includes the type and categories of key players in the insurance market.

For simplicity, we will use, throughout this article, the term insurer(s) to mean insurance company or companies.

Insurance Products: Insurance products sold by insurers are divided into two main categories. Short Term or General insurance products providing protection for one year and below. Examples of short-term products are motor cover, fire, medical, funeral insurance, etc.

Long Term or Life insurance products provide protection for more than one year. Examples include whole life assurance – protecting a designated beneficiary upon death, or critical illness or terminal illness, it also covers annuities, and endowment insurance.

Buyers of insurance (the insured or policy holders): Buyers of insurance can be divided into two main categories. Individual clients which include you and me. Corporate clients include entities and the Government.

Insurance Companies: The main role of insurance companies (also known as insurers) is taking away risks from you and promising to pay you for any losses or damage that may affect your property or life. Presently there are 32 registered insurance companies in Tanzania, some offering general insurance, some life insurance while composite insurers sell both life and general. The products offered by insurance companies are generally the same although each company has a set of value-added services for consumers. It is important that you seek advice before buying a policy as this will enable you to buy a policy that will meet your needs.

Reinsurance Companies: The way you are afraid of losses arising and adversely affecting your daily life, possessions or business is the same way insurers fear receiving claims that they may not be able to pay if they are the only ones to pay for the whole burden alone. Therefore, to manage this fear insurers also buy insurance protection, this time from reinsurers. There are three locally incorporated reinsurers in Tanzania, these include Tanzania Reinsurance Company Ltd (TanRe), Grand Reinsurance Tanzania (Grandre) and Panafrique Re Limited.

Insurance Intermediaries: In most cases, insurance companies do not sell their products directly to consumers, but often use intermediaries. These intermediaries include insurance agents, insurance brokers and medical insurance providers (hospitals), sales executives. These are called intermediaries because they do not have products of their own to sell but only sell products of and on behalf of insurance companies. All intermediaries must be registered with the Tanzania Insurance Regulatory Authority (TIRA) and are issued with licenses every year. The difference between agents and brokers is that while agents only sell products of insurers they are authorized to represent, brokers are professionals who offer professional advice on insurance to their clients. Others may include the medical insurance providers (MIP) brokers who specialize in medical insurance business.

Other players in the Insurance market include:

Loss Adjusters: these are specialized in adjusting loss amounts on behalf of insurers.

Insurance Surveyors: Are appointed by insurers to survey, mostly properties to be insured against fire in order to advise insurers about the exact risk characteristics. This helps insurers to underwrite the risks appropriately.

Motor Assessors: Like surveyors, they are appointed by insurers to assess your motor vehicle before the insurer can underwrite and insure it. Risk Managers: Are appointed by insurers to provide advice on loss prevention mechanisms. Their advice enables insurers to set terms, conditions and warranties in the policy that must be observed by the insured to minimize loss. Insurance Investigators: Investigate losses on behalf of insurers after they have occurred.

In conclusion, knowledge of the insurance market is very important for you as we have noted that many policyholders do not know who their insurers are. Some insurance agents and brokers often refer to themselves as insurance companies. Brokers and medical insurance providers only sell products belonging to insurers and are not directly responsible for paying your claims. Ask an agent which insurance companies they represent. Brokers and medical insurance providers also have the obligation to tell you to which insurance company they have placed your business.