Tanzanian insurance firms upbeat after first quarter business growth

What you need to know:

  • Total gross written premiums for the insurance industry have increased by 13.68 percent in the first quarter of 2024, with small and medium-sized companies showing higher growth

Dar es Salaam. Insurance stakeholders estimate that the industry will grow more in the third and fourth quarters of the new financial year due to various ongoing projects in the country, such as road construction, oil and gas, mining and port expansion.

In the insurance sector's first-quarter report, insurers anticipate the initiation of numerous projects as the new financial year commences.

This anticipation stems from the government's provision of funds, which insurance companies will insure against potential risks.

The newfound optimism comes at a time when the total gross written premiums (GWP) for the insurance industry have increased by 13.68 percent in the first quarter of this year, with small and medium-sized companies showing higher growth.

However, the quarterly report shows that large insurance companies, including state-owned ones, are reducing their premiums and recording negative growth compared to the same period last year, while struggling insurers are emerging from the ashes.

This, insurance experts say, was a clear indication that in a free market economy, competition is high, and thus only those who work hard will survive.

According to the quarterly report for January to March this year, which was published by the Association of Tanzania Insurers (ATI) earlier this week, the GWP for life and non-life insurance has increased to Sh379.4 billion from Sh333.8 billion that was registered during the same period last year.

Resolution Insurance Company, which has been under the supervision of the regulator due to capital inadequacy, has shown a growth rate of more than four times. Its GWP rose from Sh243.10 million during the first quarter of last year to Sh1.2 billion during a similar period this year equal to a growth of 417.95 percent.

However, the report showed that seven general insurers recorded negative growth, including the largest, the National Insurance Corporation (NIC), Zanzibar Insurance Corporation (ZIC), Sanlam General Insurance Tanzania and Reliance Insurance.

Speaking to The Citizen yesterday, Khamis Suleiman, the chairman of ATI, attributed the growth to a multitude of ongoing activities, particularly within the infrastructure sector.

He highlighted the new projects, such as road construction, port expansion, and construction activities in the mining sector, all of which have significantly bolstered business within the sector.

Besides, oil and gas exploration activities will also give a much-needed boost to the insurance sector.

Mr Suleiman also noted that Tanzania's ecological and environmental changes have compelled individuals to invest in insurance for their protection.

Furthermore, he highlighted an increased understanding of insurance services across the country, indicating a growing awareness of the importance of safeguarding against potential risks.

"As such, we anticipate significant growth in the second and third quarters, as the endorsement of the national budget for 2024/25 will trigger the initiation of numerous projects that will necessitate insurance coverage," he remarked.

According to the Commissioner for Insurance, Dr Baghayo Saqware, the reforms that took place in the industry have increased the confidence of investors.

These reforms include the introduction of digital platform systems, which serve to reduce firms’ operating costs and enhance profitability.

Additionally, various reforms initiated by the government to foster a conducive business environment have also played a significant role in fostering growth within the sector.

“This market is very promising in the near future. I have seen a number of small farmers get insurance services for the protection of their crops. But it is Universal Health Insurance and oil and gas projects that will stimulate the market,” he said.

He urged Tanzanians to place their trust in insurance services and to consider purchasing various property protection policies to safeguard against potential disasters.

"I also call upon service providers to implement robust systems capable of controlling fraud, and to cooperate with the regulator in addressing individuals who misuse insurance funds and engage in document forgery," he emphasised.

On the other hand, national secretary for the Insurance Agents Association of Tanzania (IAAT), Ms Esther Mwamfupe, pointed out that the report indicates that middle- and small-sized companies are outperforming larger ones. She stressed the importance of further assessment to understand the reasons behind this disparity.

She highlighted a general increase in insurance registrations since last year, noting that life insurance has been leading the trend as individuals are purchasing policies for future security.

"We have observed that government-owned insurance companies did not perform well in the past three months compared to the same period last year. They need to review their strategies and identify any potential mismatches with consumer requirements," she remarked.

Insurance expert and trainer, Mr Charles Chanya, noted significant progress among small insurance companies during the first quarter.

He remarked that, overall, the market has shown growth compared to the same period last year, attributing this trend to increased disposable income among individuals.

This has prompted many to purchase insurance policies, such as upgrading from third-party to comprehensive coverage.

However, Mr Charles Chanya pointed out that government-owned and state-owned companies have experienced negative growth compared to last year.

He suggested that this decline may be attributed to the market becoming more free and competitive, prompting a shift in consumer preferences and behaviour.

"We have observed a significant growth of 13 percent in life insurance, which is indeed substantial. This growth signifies a positive impact on the welfare of society, as individuals with insurance coverage are better equipped to navigate unforeseen challenges, such as the loss of the primary breadwinner. This financial safety net plays a crucial role in uplifting families from poverty," he emphasised.