New guidelines to tackle fraud in insurance claims

Dar es Salaam. The insurance regulator is putting together new guidelines that are meant to reduce fraud involving health service providers as it ups its regulatory role to counter various risks that could potentially block further growth of the sector and its contribution to Tanzania’s economy.

This comes as the latest report by Tanzania Insurance Regulatory Authority (Tira) shows that the insurance sector’s contribution to the Gross Domestic Product (GDP) rose from 0.7 percent in 2019 to 1.68 percent in 2021.

This growth is largely attributed to a rise in the number of people who go for insurance products. This is propelled by enhanced public awareness, creation of new ways of distributing insurance products, including through technological equipment such as mobile phones.

Tanzania’s political stability also sets an enabling environment for investors to invest in the sector.

However, the growth notwithstanding, the regulator says there were still several risk indicators that could derail further rise of the sector if they are not acted upon. The risks, highlighted by Tira, are connected to fraud, compliance, cyber, insurance, external, market, liquidity and governance.

“In this area, victims are mostly companies that provide health insurance. There are hospitals that collude with some employees of insurance firms to issue unrealistic claims,” said Commissioner for Insurance, Dr Baghayo Saqware.

He said that was why the regulator was currently working on new guidelines in its effort to monitor hospitals that issue unrealistic claims.

“Along with new guidelines to monitor hospitals, we will also come up with other guidelines that will look at the client who has reported a fake incident in order to be paid,” he insisted.

Dr Saqware was speaking at the weekend during an event where Tira issued a new report on the market trend for the past three years.

He said Tira continued to work closely with other government agencies, including the police force and the judiciary in ensuring that laws and regulations of criminal and fraudulent activities are controlled.

“We have managed to identify companies that obey the law and those companies that disobey,” he said

According to him, the regulator continues to manage and monitor companies that comply with the law as well as those that do not comply.

Tira has also issued a document about proper security management of various statistics and information of business in an effort to ensure that cyber risks are put on check.

Increasing

Total sales for the insurance sector rose to Sh912 billion from Sh824 billion during the past three years.

During the period, motor insurance accounted for 35.5 percent of all general insurance business while fire and health followed with a contribution of 21.5 percent and 18.4 percent respectively.

Life insurance groups accounted for 79.58 percent of the insurance business.

Agricultural insurance sales were Sh1.3 billion in 2021 equivalent to 0.17 percent of all general insurance sales.The small increase in the contribution of agricultural insurance was due to limited ability of farmers to afford insurance payments, coupled with limited technology and poor infrastructure for effective operation of insurance of agriculture as well as non-availability of sufficient agricultural information to register insurance.

During the report , the National Insurance Corporation (NIC) was the leader in underwriting profit, followed by Alliance and Mo Insurance. On Gross Premium Written, the Jubilee was on the top followed by Strategies and Alliance.

The report detailed a total of Sh765.8 billion which is equal to 84.0 percent of all insurance sales where most of them are from the Dar es Salaam region.

Until June this year, the total number of Tanzanians using insurance services reached 7,829,619 compared to 6,003,239 users in June last year. This increase is due to awareness and provision of insurance education to the public.

“This report is comprehensive. It gives investors and players enough information for decision making,” said FBN Insurance Brokers Ltd general manager Omary Aziz.

The head of the department of finance from the University of Dar es Salaam (UDSM), Dr Tobias Swai said a particular focus should now be directed towards boosting insurance penetration in rural areas, targeting agriculture and livestock.