Riot victims face insurance exclusion

The unrest led to businesses being looted, vehicles being set ablaze, and private property being destroyed during clashes between police and protesters.

Speaking to The Citizen on Wednesday, insurance operators indicated that many affected owners would rush to their insurers seeking compensation, only to learn that their losses fell outside the scope of standard insurance contracts.

Mr Khamis Suleiman, the chief executive officer of Sanlam General and former chairman of the Association of Tanzania Insurers (ATI), explained that standard fire insurance policies no longer cover political riots unless clients purchase an extended Political Violence and Terrorism (PVT) policy.

“Previously, incidents such as the September 11 attacks and political riots were included in fire policy coverage, but as such incidents increased globally, insurers decided that this coverage should only apply if a client acquired an extended policy,” Mr Suleiman said.

He added that fire policies still cover malicious damage, such as arson motivated by personal grievances or strikes involving workers with common interests, but do not cover politically motivated destruction.

In Tanzania, Mr Suleiman noted, PVT insurance was offered during the 2015 elections due to the high risk of political unrest. However, by 2020 and again this year, such policies were not widely purchased because of limited demand and low political competition.

“This year, there was no significant political tension, so businesspeople did not seek PVT coverage. Brokers are advised to inform clients about such coverage, especially for supermarkets and other high-risk businesses in urban areas prone to unrest,” he added.

Mr Suleiman also emphasised the role of brokers and bancassurance, stating that insurance companies directly handle only six percent of client interactions, leaving the majority to intermediaries responsible for educating clients about extended coverage.

Regarding life insurance, Mr Suleiman noted that compensation would only be paid to individuals with an active policy who were killed outside the context of the protests.

He cited the example of someone who might have been accidentally killed while in their car. “Individuals who participated in the demonstrations will not be compensated,” he said.

Dr Baghayo Saqware, Commissioner of Insurance at the Tanzania Insurance Regulatory Authority (Tira), confirmed that only those who purchased PVT policies would be compensated for election-related damages.

“Insurance covers risks that are unintentional and natural. Property damage during the elections will not be covered unless the affected individuals had PVT insurance,” Dr Saqware said.

He noted that Tanzania’s long-standing peace and stability has made it challenging for insurers to convince clients to buy coverage against political violence.

The commissioner revealed that Tira will review whether complex risks, including political violence and climate-related events, should be included in standard policies in the future.

“We have taken note of the situation and will analyse it carefully. The findings will help us advise insurance companies on designing suitable products for emerging risks,” Dr Saqware said, extending sympathies to those affected.

On another note, Dr Anselmi Anselmi, managing director of ACCLAVIA Insurance Brokers & Risk Consultants, urged Tanzanians to seek professional insurance advice.

“Many people overlook the importance of professional guidance. Regular brokers already advise clients about such coverage. Protection is always better than reaction, and the cost of prevention is far lower than the losses faced without insurance,” he emphasised.