Hope as regulatory reforms reshape insurance industry

Dar es Salaam. Players in the insurance sector have voiced optimism about the industry’s prospects following a number of regulatory measures implemented in 2022 that are influencing the industry’s future.

The insurance regulator introduced several guidelines that aim to restore discipline and reduce fraud to promote a fair competition in the market.

The guidelines were released at the same time as the market report, which was eagerly anticipated by all parties and provided information on the sector’s current state and projected future.

The insurance subsector aims to guarantee that its contribution to the GDP reaches 5 percent and that penetration is at least 50 percent, as stated in the government’s Financial Master Plan 2030.

Until June 2022, there were 7.8 million Tanzanians who used insurance services nationwide, out of a total population of 61.7 million.

The number of insurance service users had increased from 6.0 million in June 2021, thanks to increasing awareness and provision of insurance education to the public.

According to insurance stakeholders, the year 2022 was full of productive insurance activities that brought stakeholders together, gave them the chance to talk about various topics and allowed them to continue spreading insurance knowledge.

The business underwent several reforms, which players contend are fostering an advantageous climate for the future.

These reforms ranged from Islamic Insurance to Claims Management and Banassurance Regulation.

Among the guidelines that were introduced in the market this year include investment and solvency margin management, insurance claims management, bancassurance conduct of business and Takaful operational.

Others are guidelines for insurance digital platforms, sales force executives and indicative guidelines for insurance compensation rates for third party personal injury and death claims, and the implementation of international financial reporting standards on insurance contracts (IFRS 17).

The head of the Tanzania Insurance Regulatory Authority (Tira), Dr Baghayo Abdallah Saqware described 2022 as a year of reforms that aim to expand the insurance market, the official results of which will begin to be seen in 2023.

“Next year, we expect to see many positive results such as discipline in the market, increased growth, and the number of users will increase due to various platforms that are legally allowed to sell insurance products,” he said.

According to him, the rules control each service provider, ensuring a fair and competitive market as well as the abolition of malpractice and insurance payment fraud.

For his part, FBN Insurance Brokers Ltd general manager, Mr Omary Aziz, said: “In general, the insurance market underwent transformation in 2022. The market operated without current information for three years, which had an impact on the decisions that needed to be made.”

“The Islamic financial sector has long cried out for rules on Takaful (Islamic Insurance) operations to address the usage of insurance by people who are glad to employ faith-based services,” he said, adding that it will now include the excluded population in the insurance services.

The performance of the sector over the past three years has been emphasised in a recent study.

He said that without clear information, investors had to put in extra effort to obtain the information or engage in the market on the basis of speculation.

According to Callinggod Temu, an underwriter with Aris Risk and Insurance Solution, the insurance sector regulator took a number of steps in 2022.

“We just introduced the oil and gas consortium, a new product on the market. The market is now honing its skills to seize the chances,” he said.

“The year has been highly strategically planned, primarily encouraging a fresh perspective on the insurance industry with the goal of increasing its economic contribution. The only way to achieve the desired growth in the insurance industry is to create a demand along the value chain for things like having sufficient skills, appropriate investments, appropriate laws and regulations, good policies, and appropriate selection of strategic partners to concentrate on shared objectives,” he insisted.

According to insurance industry expert Jumanne Mbepo, the regulations that will be put into effect will address a variety of problems, open up new opportunities, and resolve conflicts in the market, all with the aim of ensuring that the insurance sector grows.

“Additionally, we have observed penalties and public exposure for insurers who have not operated in accordance with the policies. Due to the common concerns that insurers are not paying claims, this has helped to rebuild market trust,” he said.

Moreover, the market reacted to several incidents that happened in the nation in 2022, such as bus accidents, fires at Kariakoo Market, and the most recent plane crash involving Precision Air.

Market performance

The insurance sector’s economic contribution increased from 0.7 percent in 2019 to 1.68 percent in 2018, and total insurance sales rose to Sh912 billion from Sh824 billion during that time.

The increase in demand for products was linked to an increase in the population with income. The market expanded as a result of more knowledge, the invention of new insurance distribution methods and delivery via mobile phones.

In the three years, vehicle insurance made up 35.5 percent of all insurance services, followed by fire insurance at 21.5 percent and health insurance at 18.4 percent. However, in terms of life insurance, group insurance accounts for the majority (79.58 percent), followed by individual insurance (20.4 percent). Agricultural insurance sales were Sh1.3 billion in 2021 equivalent to 0.17 percent of all general insurance sales, according to the report.

Farmers’ restricted ability to afford insurance premiums was the cause of the agricultural insurance contribution’s little rise.

Inadequate infrastructure and inadequate technology for running farm insurance, as well as a lack of adequate agricultural data to register insurance, are additional factors.

According to the data, the Dar es Salaam Region accounted for Sh765.8 billion, or 84.0 percent of all insurance sales.