How lockdowns elsewhere hit Tanzania's insurance industry

Dar es Salaam. Tanzania may not have employed lockdowns in the war against the Covid-19 pandemic, but the outcomes of such measures in some countries have had an impact on the East African country’s insurance sector, data show.

Gross premium income declined by 1.6 percent in 2020 compared to what was garnered in 2019, largely due to a fall in tourism, engineering and marine projects.

Gross premiums fell to Sh689.9 billion in 2020 compared to the Sh694.8 billion that was recorded during the preceding year, according to a Draft Annual Insurance Market Performance Report for the year to December 31, 2020.

The report is published by the Tanzania Insurance Regulatory Authority (Tira).

“This was largely due to the impact caused by lockdown and other restrictions in different countries which impacted the engineering projects undertaken in Tanzania,” the report reads - adding that the decrease in marine activities due to the pandemic also resulted in a drop in premiums resulting from marine class of business, compared to year 2019.

According to the report, the pandemic saw some clients changing their insurance covers from comprehensive to third party fire and theft for some of the assets in different economic sectors.

“Tourism was also specifically affected by lockdowns and curfews in other countries - thus hindering the growth of general insurance premiums compared to the year 2019,” reads part of the report.

Speaking to The Citizen yesterday, the Tira acting director for Planning, Research and Development, Mr Zachariah Muyengi, said the drop explains the connectedness of the three sectors to the international economy.

“It is true that the pandemic outbreak was the reason for the decline in Gross Written Premiums in the three sectors. This is because the transaction and risk covers in the areas are well linked with outside or international relationships in terms of experts, businesses or tourists,” Mr Muyengi said.

Due to the pandemic, insurance players have learned new lessons - and that they were currently looking for other sectors such as livestock, agriculture and fisheries.

According to him, Tira would encourage companies to invest in technologies that will help to deliver insurance services to large numbers of people at affordable cost.

However, he said, insurers are supposed to introduce products that are demand-driven, and which will be used by all types of people based on their income status instead of having few products.

“We have a plan to automate some of the systems used to provide insurance services. For example, the Tanzania Importation Insurance Portal (TIIP) that help the regulator to well supervise all the cargos through marine, railways, aviation and roads,” Mr Muyengi said, adding the aim is to ensure that premiums are increased.

Insurance experts said it is high time that companies focused on other sectors like agriculture, livestock, fisheries and Small and Medium Enterprises (SMEs) which employ a large number of people.

The sectors also have the potential to cushion the sector from a drop in premiums in case of global pandemics instead of just relying on connected sectors.

On the other hand, the Agriculture and Climate Risk Enterprise Ltd (ACRE) country manager, Mr Christopher Mazali, said the three sectors are connected globally so in case of pandemic it’s easy to be affected and insurance companies will be directly affected.

“SMEs and agriculture have large potentials. For instance, even if there is a pandemic, people will continue eating.

“So, insurance companies must now focus on other areas by introducing products that are affordable to those groups,” he said.

He went further, saying Tanzania’s economy is also contributed to by SMEs and agriculture. But the insurance companies cover a very minor percentage.

So, in the pandemic last year are lessons that should be leant by insurers.

Also, the government should continue to create a conducive environment for companies so that they can introduce products that are affordable to all levels of people.

Meanwhile, an insurance expert, Mr Ancelim Anselm, said a need for comprehensive research to understand the pandemic’s impact on the trend of business so as to develop appropriate strategies to mitigate its impact on insurance.

“Companies should also expand insurance products and services and focus on areas such as SMEs, health and agriculture.”