How can Tanzania grow the sector and exploit the unique combination of factors Africa has in her favour?

Young age Population in Tanzania

50 per cent of Africa’s population is under 25 years old. Tanzania has a young population age, which presents the opportunity to target this sector because they will be future customers of insurance products and a new generation of talent and human capital.

Insurance sensitisation

Tanzanians must trust insurers, understand why they should invest their hard earned shillings in insurance products and learn more about insurance- it is not an investment or savings policy like a bank but a non-tangible commodity that offers protection. Cultural differences and emotional trust are vital; especially in Tanzania which has such a diversity of languages.

Natural resources in Tanzania

Tanzania has mining, tourism and agricultural resources which will drive up economic growth and as this happens, insurance infrastructure must grow to support it, through greater capacity to underwrite and through new products. As GDP per capita rises insurance penetration will rise until it saturates - this is referred to as an S Curve. In support, inflation is stable, agricultural GDP is increasing and mobile money/mobile technology is a boom industry; and indeed there is a wider growing financial services sector. Insurance can underpin the growth.

Micro-Insurance in Tanzania

Tanzania has a Micro-Insurance Act which provides a framework for growth. Micro-insurance is low cost insurance with low levels of cover for the mass market. The challenge is the balance of pursuit of a new market and growth vs. risk - how to understand the customer, how to avoid non-payment of genuine claims. The key is striking the balance; increase access to insurance and make it simple and easy and pay claims fast with jargon free policies in Swahili; but ensure you as the underwriter has some risk management. Insurers must work with agents, brokers and utilise mobile technology to exploit this market. A micro-insurance customer today may be your main stream customer tomorrow.

Distribution channels

Insurers must innovate to reach the large rural Tanzanian population in towns and villages, not just with micro-insurance but also with partnerships and technology. Bank assurance is an example - whether it is a strategic alliance, a bank owned insurer, a joint venture or fully integrated service. However, exploit the emerging middle class who have more disposable income and a need for insurance products - by 2020 there will be 250 million middle class Africans.

Data analytics

Data is a powerful underwriting tool and can aid innovation and pricing. Insurers can use the latest weather insurance tools to shape agriculture policies based on index pricing and accurate risk knowledge. Mobile technology growth is up 100pc in Africa so insurers must leverage on this and use social media alongside analytics.

Takaful insurance in Tanzania

Tanzania has a large Islamic population (the biggest concentration in East Africa) and needs to ensure there are Sharia compliant insurance products and policies to cater for their needs; this will drive penetration as can be seen in Morocco and other West African countries.

Reduce insurance fraud

Insurance fraud was estimated to add 31 per cent to the cost of the premium in Tanzania. If fraud is detected and reported and stakeholders share intelligence and data, the customer will benefit through lower premiums, which will push up penetration. The challenge is to enhance preventative risk management controls and be leaner at investigations.

Improve customer care

Adopting practical customer concepts like embracing conduct risk management principles (for example delivering fair outcomes) will mean Tanzania steals a march on other East African countries - the new Ombudsman is a good example of placing more focus and care around customers and it must extend from product design to claims payments in both main stream and micro insurance

Increase private sector and FDI (foreign direct investment)

Working with foreign organisations and local private sector entities will complement the balance between nurturing local talent and local insurers/re-insurers vs external support. Kenya has a stronger private sector as a comparable but Ethiopia does not. This will support wider infrastructure growth.

If the sector uses enterprise risk management to look holistically at its operations it can identify these opportunities and challenges; how far along is it in taking such steps, where it is strategically increasing penetration and growth and how to balance risk taking vs reward. This must be supported by capacity building and investment in people, processes and products.

If this happens, the insurance sector can look forward to increased growth and investment, therefore strengthening the economy and the market reputation in the region.

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