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Bancassurance
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Out of the total insurance premium written during 2021 in Tanzania (TZS 911.5 billion), TZS 179.1 billion representing 19.7% was transacted through bancassurance agents.
About Bankassurance in Tanzania
Bancassurance is a term used to describe the sale of insurance products through banks. In Tanzania, bancassurance refers to the practice of banks selling insurance products, such as general insurance, life insurance, health insurance, and property insurance, to their customers.
Bancassurance is a way for banks to offer a wider range of financial products to their customers, and it is a way for insurance companies to reach new customers.
There are several benefits to bancassurance for both banks and customers. For banks, bancassurance can be a source of additional revenue, and it can also help to strengthen customer relationships by providing a more comprehensive range of financial services. For customers, bancassurance can be a convenient way to purchase insurance, as they can do so while conducting their other banking activities.
But bancassurance is not the only way to purchase insurance in Tanzania. Customers can also buy insurance directly from insurance companies or through independent insurance brokers and agents.
Regulation of Bancassurance in Tanzania
In Tanzania, bancassurance is regulated by the Bank of Tanzania (BOT) and the Tanzania Insurance Regulatory Authority (TIRA).
Bancassurance Regulations were officially launched on 16th May 2019 to provide a regulatory framework and legal guidance for licensing and conducting bancassurance business in the Tanzanian market.
This new distribution channel via banks aims at increasing insurance uptake and penetration, eventually expanding the insurance industry.
To offer insurance products through bancassurance, banks operating in Tanzania must obtain permission from BOT and comply with the regulations set by the TIRA, which include requirements for capital adequacy, solvency, and risk management.
In addition to these regulatory requirements, banks that offer bancassurance must also follow specific guidelines for how they sell insurance products. For example, they must ensure that their employees are properly trained to sell insurance and that they provide customers with clear and accurate information about the products they are selling. Banks must also have processes in place to handle customer complaints and disputes.
Overall, the regulation of bancassurance in Tanzania is designed to protect consumers and ensure that they have access to high-quality insurance products that meet their needs.
Market Share of Bancassurance in the Tanzanian Insurance Business
Out of the total insurance premium written during 2021 in Tanzania (TZS 911.5 billion), TZS 179.1 billion representing 19.7% was transacted through bancassurance agents. In 2020, business transacted through bancassurance agents amounted to TZS 92.5 billion representing 11.2% of the total insurance premium written.
In 2021, bancassurance agents contributed TZS 90.1 billion in the general insurance business representing 12.1% of the total general insurance premium. In 2020, the amount was TZS 25.5 billion representing 3.7% of the total general insurance business.
During 2021, on a class-by-class basis, the level of involvement of bancassurance agents in the underwriting of general insurance differed from one class to another.
The highest bancassurance agents’ involvement was observed in the motor insurance class of business, whereby 51.0% of the entire premium volume was collected by bancassurance agents.
That was followed by Fire with 14.7%, other general with 16.1%, health with 11.2%, accident with 3%, and remaining classes with 3.0% each. In 2020 motor insurance accounted for 44.0% followed by miscellaneous with 28%, fire with 13%, health with 7.9% and the remaining classes with 3.0%.
Total premium transacted by bancassurance agents in respect of 2021 life assurance business amounted to TZS 89.0 billion in life business representing 53.9% of the total life assurance premium. In 2020 the amount was TZS 72.9 billion representing 53.7% of the total life assurance business.
On a class-by-class basis, the highest bancassurance agents’ involvement in transacting life assurance products is observed in Group Life business whereby 90.9% of the entire premium volume was transacted by bancassurance agents. This was followed by Individual Life contributing 9.1%. In 2020 the largest portion was in group life with 94.9% followed by individual with 5.1%.
Banks Providing Bancassurance in Tanzania
As of 2021, 23 banks and other financial institutions were licensed by TIRA to operate as bancassurance agents in Tanzania.
In the same year, the largest bancassurance agents’ share of the general insurance business of 32.6% was held by CRDB Bank, followed by National Microfinance Bank (NMB) with 32.0%, National Bank of Commerce Limited with 11.8%, Stanbic Bank with 5.1, and the remaining banks transacted below 5%.
The largest bancassurance agent for life assurance was National Microfinance Bank (NMB) with 54.4% of the business, followed by CRDB Bank with 25.9%, and National Bank of Commerce (NBC) with 9.4%. These bancassurance agents collectively handled about 89.7% of the entire bancassurance life assurance business in Tanzania, while other agents (which contributed less than 2.5% each) transacted the remaining 10.3%. In 2020 the largest share was held by NMB with 86.3%, followed by NBC with 9.1%, and ABSA with 3.3%. The remaining banks accounted for less than 1.0%.
Read our free report on the insurance sector in Tanzania to learn more about the industry.
Last Updated: 17th December 2022
