Key issues barring insurance penetration in Tanzania pointed out

Dar es Salaam. Insurance stakeholders have outlined challenges and opportunities which the industry faces despite efforts to increase its penetration.

The government targets to raise penetration from the current 0.5 percent of GDP to at least five percent by 2030. But, the firms involved in insurance provision said there were issues that need to be addressed to unlock the potentials.

Insurance brokers said there were issues of legal and regulatory framework governing the industry that must be improved, especially the national agricultural policy.

That was said by the Tanzania Insurance Brokers Association (Tiba) chairman, Amir Kiwanda, during the Insurance Distribution Channels meeting organised by Africa College of Insurance and Social Protection (ACISP).

The meeting highlighted challenges and opportunities in insurance distribution channels to increase penetration.

“We call for an all-inclusive consultative process, to involve deliberation of industry players including all insurance intermediaries, underwriters and all key stakeholders with regards to comprehensively deliberating on the legal provisions and guidelines that negatively impact on insurance environment,” he said.

According to the stakeholders from the banking sector, there were costs in operating insurance, including to have a certified professional to work in the bancassurance, technologies and software acquisition and maintenance.

However, they were optimistic that the target can be achieved through working together in addressing the issues.

They cited an example of a bank that enters into bancassurance in the beginning, saying it needs “to invest a lot as each branch must have an insurance expert holding a degree, at a minimal level.”

It also needs an automatic system that a bank must buy and integrate with its insurance services.

National Insurance Corporation managing director Elirehema Doriye said to increase insurance penetration, awareness and public education should focus on rural areas as well as most of the current users live in urban areas.

“We must ensure insurance services are inclusive. We also need to create simple channels for those in rural areas so that they get insurance. So uses of technology is inevitable,” he said.

Other stakeholders said the regulators have restricted banks to partner with only five insurance firms in bancassurance but they think it should go up to 15 firms.

Other issues include limited data, type of crops that should be insured that actually need to be improved, as well as issue of guarantees to farmers so that they get loans.

Speaking at the event, ACISP chairman Baghayo Saqware said distribution channels in insurance were likened to blood vessels in the blood circulation system and challenges in distribution channels result into paralysis.

“This is why the component of distribution is highly considered by the master plan 2030 and we at college have taken to heart this important function,” Dr Saqware said.

For his part, Sanlam Life managing director Mr Julius Magabe said the distribution channel is part of supporting other channels in selling the insurance products to public.

He said to ensure the penetration increased stakeholders must ensure the products reach more people by creating various ways of selling.