Insurers must adapt to drive green transition, experts say

Dar es Salaam. As Tanzania shifts to cleaner energy sources to mitigate climate change, the insurance sector must adapt by developing products that not only mitigate risks but also drive economic transformation and foster community resilience.

Stakeholders have identified significant untapped potential in Tanzania's agriculture and renewable energy sectors. However, current insurance products are not sufficiently meeting market demand.

“Last week, a major conference on energy transition highlighted the need for tailored insurance products in areas like renewable energy, which require support to assist Tanzanians through this shift,” said the FSD Africa Principal for Innovation for Resilience, Mr Elias Omondi.

Speaking on Tuesday, February 4, 2025 at the Advancing Sustainable Insurance Market for Tanzania’s Resilience and Growth event, organised by the Tanzania Insurance Regulatory Authority (Tira), FSDT Tanzania, and FSD Africa, Mr Omondi emphasised the insurance sector’s critical role in advancing financial stability and environmental resilience.

He noted that mobilising climate investment, particularly in energy transition, requires an annual investment of $120 billion until 2040, presenting both a significant challenge and an immense opportunity for insurers.

“This is an opportunity for private capital to enter, drive innovation and develop new models that protect assets and build sustainable futures. We need innovation in financial systems. We must create and scale business models that attract private capital, particularly into the green economy. Small and Growing Businesses (SGBs) must be empowered to drive job creation and financial innovation,” he said.

Mr Omondi also stressed the importance of aligning insurance strategies with the United Nations' Sustainable Development Goals (SDGs), particularly in climate risk management and biodiversity conservation.

He noted that by doing so, the sector can address both financial and environmental crises threatening the country’s future.

In her opening remarks, Deputy Commissioner for Insurance, Ms Khadija Said, echoed similar sentiments, noting that the sector continues to expand annually with a growing number of industry players.

She encouraged insurers to invest more in agricultural insurance, which remains underdeveloped.

“There is a need for greater education within communities on how to protect their crops and assets in the face of disasters,” she said.

While insurers recognise the importance of agricultural insurance, motivation remains low.

Acclavia Insurance Brokers and Risk Consultants Managing Director, Dr Anselmi, underscored the need for insurers to embrace innovative technology and data-driven solutions.

“To build resilience and ensure sustainable insurance, we must focus on raising awareness, educating the public, and fostering community engagement and partnerships,” he said.

He also stressed the critical role the insurance industry can play in supporting the transition to a sustainable economy.

“The challenge is addressing sustainability for both current and future business needs. The insurance industry’s global influence positions it uniquely to support this transition across both public and private sectors.”

“As Tanzania addresses both its climate and financial challenges, the insurance sector must evolve by designing products that cater to the changing needs of a sustainable economy. This will not only protect communities but also stimulate growth, ensuring a resilient and thriving future for the country,” he concluded.