Interview with Stephen Okundi CEO of Real Insurance Tanzania

TanzaniaInvest conducted a Q&A session with Stephen Okundi, CEO of Real Insurance Tanzania, to discuss the Tanzania insurance sector and Real’s positioning and ambitions in the Tanzanian insurance market.

TanzaniaInvest: Real Insurance is a Kenyan insurance company that expanded in Tanzania. How would you describe Tanzania’s insurance sector current situation?

Stephen Okundi: There has been a lot of improvements compared to 1998 when the Tanzanian insurance market was liberalized.

The number of players has increased and there has been increased trust from the general public on the ability of insurance companies to honour their promise.

The sector is still in the growth stage as the market was liberalized just 15 years ago.

There is still a lot of potential as the vast majority of the Tanzanian population have not taken up insurance services.

{xtypo_quote_right}There is still a lot of potential as the vast majority of the Tanzanian population have not taken up insurance services{/xtypo_quote_right}

TI: What is driving the growth of the market?

SO: The GDP growth rate of around 7% and the rate of inflation which has come down to 6%.

The general awareness has also improved especially in the urban areas.

TI: How would you compare it at regional level?

SO: At regional level, the Tanzanian insurance market is still young having been liberalised in 1998.

However, with the vast natural resources in which our country is endowed with, the rich agricultural land and a population of 44 million people, the potential for growth is great.

TI: There are 26 registered insurance companies and 62 registered insurance brokers operates in Tanzania. Is the current number of player enough to satisfy the current demand for insurance services, or rather the market is saturated?

SO: The issue here is not the number of players but the level of penetration of the insurance services.

Currently, the penetration level is below 1%.

{xtypo_quote_left}The market is only saturated in the major urban areas while the rural areas including regions are not reached by insurance services{/xtypo_quote_left}

The market is only saturated in the major urban areas while the rural areas including regions are not reached by insurance services.

TI: It is estimated that about 80% market share is in the hands of brokers. Is such situation adequate for a healthy growth of the insurance sector?

SO: On the one hand, it is healthy as brokers are professionals and hence the general public will be able to be advised on insurance matters.

On the other hand, it is not healthy as they dictate the terms in the market.

TI: How important is it for you to have a strong brand in the insurance market in Tanzania?

SO: This is the only way that we can stand out of the crowd. Strong brand will enable Real Insurance to be a household name hence growth and profitability.

{xtypo_quote_right}Strong brand will enable Real Insurance to be a household name hence growth and profitability{/xtypo_quote_right}

TI: Less than 1% of Tanzanians use insurance services. What are the greatest challenges to insurance penetration in Tanzania?

SO: Lack of awareness, lack of infrastructure such as distribution channels to reach the rural areas, and low income per capita.

TI: Which areas of insurance are still underexploited in Tanzania?

SO: Agriculture, life, medical and domestic insurance, micro-insurance products.

There is a lot of potential for insurance products placement in in the rural parts of Tanzania

TI: How will you address the distribution and servicing challenges that these remote areas involve?

SO: By partnering with organizations that are represented in the areas, we will be able to reach the unreached.

We partner with financial institutions and Savings And Credit Co-operatives (SACCOs).

TI: What is your view on Tanzanian banks starting selling insurance products?

SO: This is a good idea as they have the customer base.

They will still need us a their principal hence resulting in increased business.

TI: What is Real Insurance Tanzania current market share?

SO: 4.4%.

TI: What are the pillars of Real’s development strategy in Tanzania?

SO: People, Innovation and Technology.

TI: What are your ambitions and the challenges ahead?

SO: My ambition is to be the number one insurer in Tanzania.

{xtypo_quote_left}My ambition is to be the number one insurer in Tanzania{/xtypo_quote_left}

My main challenge is the lack of awareness on insurance products.

TI: Which new initiatives will you introduce in 2014?

SO: New innovative products are in the process of which I cannot mention at the moment. 

RELATED:  Tanzania Posts Corporation Interview