Interesting Facts about Insurance in Tanzania,8 '16 Subject: Business, Viewed by: 166
When it comes to the insurance industry in Tanzania, decreased awareness about insurance, its relevance, and benefits are causing a low penetration potential, especially among the underserved rural population. The rate of insurance penetration is recorded as only 1%, but this sector has a large growth potential if there is a committed effort to increase the insurance and financial literacy as a basement of growth.
As of late, the Tanzanian insurance industry consists of nearly 30 insurance companies including many international corporate and 112 insurance brokers actively operating in the market. The total premium amount has reached to about TZS 554.4 billion back last year, which was an increase of 17% from the previous year.
About insurance in Tanzania
In an ideal scenario, the growth in insurance sector should always be in line with the economic growth of a country. Mr Israel Kamuzora, the Commissioner of Insurance and CEO of Tanzania Insurance Regulatory Authority, attributes the low penetration level and knowledge of insurance to historical and cultural factors.
Despite all these facts, the insurance industry in Tanzania still shows a growth rate of nearly 20% every year for the last few years. However, when the global average is 2.3% in terms of insurance penetration level, the same in Tanzania is just 1% of the total GDP of the country.
A study conducted last year is projecting a 7% growth in this sector in the coming years as the income of people are rising and individuals may seek insurance with the increasing need to protect their revenues and assets.
A few notable facts;
· The per capital insurance premium, in other words the insurance density, in Tanzania grew by about 76% to TZS12,052 last year, which was about TZS6,849 back in 2010.
· TIRA (Tanzania Insurance Regulatory Authority) has estimated an 18% in the insurance sector in year 2016. It is also said that the insurance penetration may touch 0.9% of the total GDP this year.
· Last year, Tanzania’s general Insurance business amounted to a total of TZS494bn, which is about a 135% increase in the last 5 years.
· Back in 2014, the general insurance sector of Tanzania consisted of insurance policy shares as;
· Motor (44%)
· Aviation (22%)
· Fire (21%)
· Health (17%)
· Engineering (12%).
The highest growth was recorded in aviation sector, which grew by almost 41% in the last couple of years
· As per TIRA projections, the general insurance premiums may have a 33% growth by year 2017 and may reach TZS659bn.
The future scope
As discussed above, there is still a big lag for the insurance reach in line with the GDP growth, which means that there is a huge scope for growth for insurance sector in Tanzania. The major problem is that majority of the insurance policies are now focused on the traditional markets, which are meant to serve the needs of bigger corporate and high-profile individuals, but fails to reach to the lower income and rural area population.
However, this scenario is fast changing with products for agriculture and health insurance policies for rural Tanzania, which are expected to pave way to a faster penetration rate and growth in the coming years.