By Favour Nnabugwu
Tanzanian insurance sector wrote gross premiums amounting to TZS912bn ($391m) in 2021, as released by Tanzania Regulatory Authority (TIRA).
The figure represents a nominal increase of 11 percent from TZS824bn written in 2020.
TIRA commissioner Dr Baghayo Saqware said in the report, “Growth for 2020 was 1.2 percent . The financial soundness of the industry was enhanced as a result of minimum capital improvement which increased by 4.3 percent from 2020 to 2021. Total assets for the insurance industry increased by 8.4 percent from TZS1,180bn at end-2020 to TZS1,279bn as of 31 December 2021. Total assets grew by 12.6 percent in 2020 compared to the value of total assets in 2019.”
The life assurance business recorded growth of 21.6 percent from TZS135.7bn in 2020 to TZS165.0bn in 2021. Improved public awareness and quality of products created an increase in sales of individual life policies that has steered the growth.
General insurance, which constitute the bigger share in insurance market recorded an increase of 8.4 percent in gross premium income from TZS688.6bn in 2020 to TZS746.4bn in 2021. This increase is attributed to a number of factors, including an increase in compliance by the public, with the statutory requirements and new systems in place i.e. TIRA MIS, aggressive marketing and continued public awareness programmes.
The total number of insurance companies registered in Tanzania as of 31st December 2021 (including two reinsurance companies, Tan Re and Grand Re) was 33. There were two new registrations in 2021, comprising one life insurer and one reinsurance company. For the years 2019 and 2020, the number of (re)insurers remained the same at 32.
Of the total number of registered (re)insurance companies, 23 are privately owned with at least one third local ownership, two are 100 percent state-owned by the Government of the United Republic of Tanzania and the Revolutionary Government of Zanzibar and nine are 100 percent locally owned. insurance industry outlook
The report says that the Tanzanian insurance market offers numerous opportunities for growth, and international benchmarks in the African region suggest that there is much space to develop.
The overall economic outlook remains positive for the country with a GDP growth of 4.9 percent in 2021 (2020:4.8 percent) and an estimated GDP growth of between 4.5% to 5.5 percent for the year 2022 and average of 6.0 percent over the medium term. This means that middle-class Tanzanians are increasingly able to afford insurance coverage.
As the regulatory and supervisory body, TIRA is working to increase awareness. TIRA is targeting 50 percent of adult population to have access and use insurance products by 2030.
The regulator also targets to increase the insurance penetration rate to 5 percent by 2030. Insurance penetration in Tanzania is 1.68 percent at present compared to 0.8 percent for Uganda and 2.17 percent for Kenya (world average is 7.4 percent).
The penetration ratio is expected to improve following the registration of the bancassurance agents as well as increase in awareness of insurance to the public and other regulatory measures in place.
An amendment to the Insurance Act this year expands the scope for mandatory insurance to include public markets, commercial buildings, imported goods, marine vessels, ferries and pontoons. This will significantly widen the insurance penetration rate and increase insurance density. The Authority is currently working on the regulations that will provide guidance on the implementation of the legislative changes.
Furthermore, the Authority has issued new guidelines on Islamic Insurance called Takaful Operational Guidelines which took effect from May 2022. The expectation behind the guideline is to increase penetration and accommodate Shariah-compliant products so as to extend the scope of insurance services and to increase financial inclusion and insurance contributions to the economy.