How to improve insurance penetration

With the fast-paced lives we are leading today, no one knows what could happen next and that should be a trigger for one to prepare for any outcome by taking an insurance cover. Unforeseen eventualities and uncertainties are so rampant that it has become imperative to look ahead – it could be a permanent injury, sickness, loss of property or an accident; the list is endless.

There is always an apparent apathy among most citizens on the need to insure property, life, business and so forth until the inevitable happens.

Insurance cover

Save for the statutory requirements such as a motor vehicle cover, most of us have never thought of other insurance covers that could bail you out on a rainy day.

What is amiss? The simple answer is that knowledge on the industry is scanty. There is a need to preach about it from the rooftops, as it were, if the sector is to grow as expected.

Would-be customers should be made aware that unpleasant eventualities such as accidents and losses decapitate them and can adversely affect families and their property. They also should know that insurance plays a messianic role in such situations.

Public awareness

People should be made aware of the roles played by banks, insurance firms, pension funds, capital markets and money shops since finance is an important aspect of growth and development.

Lethargy towards insurance industry could possibly be seen as result of notions bred before liberalisation of the industry – that insurance companies took eons to compensate the victims and that it is an unnecessary cost on the customers paying for those premiums.

Things have changed since. New companies offering tailor-made insurance packages are already in the market, but insurance penetration still remains quite pathetic.

Discerning insurance companies are making headways in tabling products that appeal to the customers and at the same time, meet their individual needs relieving the customers the burden of having to worry further in case of an accident or any other eventuality.

That being the case, it would be prudent to invest in educating members of the public on services offered by insurance companies not only about direct accrued benefits to the customer but to the economy and overall development of the country.

Market sensitisation

Our market sensitisation has been on-going, spreading its tentacles not only in Tanzania but also in Kenya, Uganda and South Sudan-other East African Community members, where we operate and this is an on-going process.

Tanzania’s insurance industry is growing rapidly and the entry of more players in the market will create a more competitive space in the otherwise lucrative industry. However, innovation geared towards diversification in insurance is key to the industry’s growth.

The main strategy of strengthening the sector is through diversification of product portfolio, while educating the citizens on the need and relevance of investing in insurance cover.

Insurance penetration

Statistics show that insurance penetration into the country has been lagging behind.

With as little as 0.7 per cent national output Tanzania stands to immensely benefit from the growth if concerted efforts are deliberately put in place to implement policies that geared towards insurance growth in the country.

As these efforts are being made, however, stakeholders in the industry should be wary of the prevailing challenges that include, among others, low underwriting capacity of the insurance industry to participate in key emerging sub-sectors, poor public awareness (absence of a policy framework to fully require insurance players to extend their businesses to the masses especially those in the rural areas) and insufficiency of insurance professionals in the industry in key disciplines especially actuarial sciences, etc.

Challenges

However, the challenges are now being mitigated by myriads of opportunities that include a growing middle-class likely to create more demand for insurance products, steady national economic growth, new channels of insurance distribution including mobile insurance technology, existence of the National Financial Inclusion Policy for enhancement of financial literacy in Tanzania, regional integration coupled with enhanced cross-border trading market for Tanzanian insurers, continued political stability creating conducive environment for potential investors and the growth of the real estate sector in the country likely to attract demand for more insurance products-among many others.

Suffice it to say, the above factors, buoyed by increased diversification and innovation in the insurance industry, there are evident robust growth projections in the near future.

The author is managing director and principal officer of Resolution Insurance (RI).