Revealed: Factors behind 25 percent insurance leap

Dar es Salaam. The sum of total premiums collected by insurers in Tanzania rose by 25.5 percent last year, propelled by the construction and banking industries, available data shows.

Provisional figures released by the Association of Tanzania Insurers (ATI) indicate that gross premiums written (GPW) crossed the Sh1 trillion mark for the first time in 2022 to reach Sh1.154 trillion from Sh919.281 billion the previous year.

GPW refers to the total premiums (the money individuals pay for their insurance policies) written by insurance firms before deductions for reinsurance and ceding commissions.

A complete report detailing how various companies performed across several parameters will be released by ATI in due course, but provisional figures show that five companies accounted for the bulk of the GPW increase.

Topping the list is state-owned National Insurance Corporation (NIC), followed by Strategis Insurance, Alliance Insurance, Jubilee Insurance and Sanlam Life.

“The market has grown by almost 25.5 percent. This is an indication we are heading in the right direction,” ATI chairman Khamis Suleiman told The Citizen.

The rise showed that the economy was now doing well following the devastating impact of the global Covid-19 pandemic, which was at its peak in 2020 and 2021, he added.

“What this means is that the economy is growing and this has contributed to a rise in demand for insurance services.”

Mr Suleiman said the construction sector, and especially mega government projects, including the standard gauge railway (SGR), and revival of some stalled undertakings, had played a key role in boosting the insurance sector’s growth.

He was optimistic about the sector doing even better this year when execution of other major projects such as the construction of the East African Crude Oil Pipeline (Eacop) would begin.

Also, the ongoing negotiations between the government and investors on the proposed construction of a giant liquefied natural gas (LNG) complex in Lindi Region and implementation of several large projects in the mining sector are expected to further boost premiums in the near future.

Mr Suleiman said bancassurance was also an important factor in raising premiums.

“People take loans and insurers take guarantees in case of death or disability.”

Insurance expert Ancelim Ancelim said the market grew much more in 2022 than an expansion of 10 percent the industry had anticipated.

Under the Financial Sector Development Master Plan 2030, the insurance is expected to comprise five percent of Tanzania’s GDP by the turn of the decade.

“Insurance companies with medical schemes such as Strategis and Jubilee have been doing well, and this proves the importance of having an effective universal health insurance arrangement in place. Company by company analysis also indicates a healthy market as most insurance firms have experienced growth,” Mr Ancelim noted.

Life assurance grew at a record 41.74 percent in 2022. It means that life assurance offered through simple products such as group schemes and awareness campaigns are paying off.

For his part, insurance trainer Charles Chanya said big projects such as construction of the SGR had played a key role in the growth of the insurance industry in the last few years.

“I would say mega projects being undertaken by both the Union and Zanzibar governments are an important factor.”

Mr Chanya added that more projects were in the pipeline and the investments needed to be insured, thus presenting an opportunity stakeholders should seize.