By Mariam Said
The insurance industry grew at an average rate of 18 per cent in the last five years, but the services were mainly concentrated in urban centres. During the 18th Annual Insurance Day in Dar es Salaam at the weekend, the Minister of State in the President’s Office (Special Duties), Professor Mark Mwandosya, urged practitioners to move to rural areas and reach the most underserved population with insurance cover.
The theme of this year’s Insurance Day, was “Harnessing Risk Management for sustainable economic development in Tanzania” with insurance being the most commonly used method for managing risks.
Prof Mwandosya said the Insurance Day is a reflection upon the work of building a more resilient insurance industry that responds to the growing demand for different kinds of risk mitigation.
“This strong performance notwithstanding, the sector’s penetration rate as measured by the ratio of premium underwritten to GDP remains quite low. “The insurance penetration rate is estimated at one per cent which gives the sector a large growth potential that can be harnessed if there is commitment in increasing financial and insurance literacy in our country and creating a greater awareness of the importance of the insurance,” he explained.
The ideal situation is that growth in insurance coverage should not lag too far behind economic growth. In 2014, GDP registered seven per cent growth implying that incomes are rising therefore individuals and corporates should increasingly seek insurance to protect their expanding income base. The growth and penetration of the insurance sector should have subsequently mirrored the expansion of the GDP.
The wide lag between our GDP growth and insurance reach subsequently means that there are vast opportunities for growth of exposures and income in the insurance sector in Tanzania. Similarly, another area that needs to be addressed is the increase of awareness levels and the reach of insurance to the less privileged.
The majority of insurance products in our country are focused on traditional markets, serving the needs of large corporates and high income individuals, with limited product development at the lower income end of the population.
While corporates are an important business segment in growing revenues, the rising population in Tanzania requiring life, health and other general insurance products provides additional opportunities for growth in the industry.
Commissioner of Insurance, Mr Israel Kamuzora, said as an industry, insurance needs to emphasise on the importance of mitigating the effects of hazards to the general public and allowing them to make their informed choices by taking appropriate insurance covers.
Due to the sector’s sizeable reserves, insurance sector provides capital for long-term investments and infrastructure in addition to its core function of helping corporate and households in managing the risks.
“We are living in the age of the Risk society. Risks are no longer imposed by exogenous factors and regarded as a matter of fate instead risks are no more just a matter of destiny but contemporary risks are increasingly manufactured in that they are the result of human decisions and actions,” he said.
He added, “it is access to knowledge and expertise that allows individuals, at least to some extent to avert exposure to particular risks.”
Tanzania Daily News (Dar es Salaam)