Tanzania has been recently named by Ernst & Young (EY) as one of the most attractive markets in Sub Saharan Africa (SSA) in terms of investment opportunities in the insurance industry towards 2018.
It was indicated in the report titled “Waves of Change Revisited: Insurance Opportunities in Sub Saharan Africa” recently released by EY, which analyzed the growth potential for the insurance sector in SSA due to the low penetration of insurance products and its position as the second fastest growing region after developing Asia.
Tanzania was evaluated together with Kenya, Malawi, Zambia, Uganda, Ghana, and Nigeria through a survey which involved 125 insurance executives in the cited countries and the analysis of insights from key executives in this industry.
Tanzania, in terms of potential growth, volatility of returns, price competition, and sales channels’ innovation, constitute the fourth most attractive mix of reward-risk ahead of bigger economies as Ghana and Nigeria towards 2018, states the report.
Regarding potential growth, Tanzania ranks fourth with 9% towards 2018 ahead by 5% from Ghana and Nigeria with 4% and only 2% behind Zambia, which tops the list with 11% in the same period.
According to EY, GDP potential growth will be the main driver of insurance products’ premiums growth in the short-term since the survey ranks it first with 41% followed by product innovation with 22%, regulatory changes with 15%, competition 11%, and technological changes with 10%.
In addition, Tanzania holds one of the lowest penetration of insurance products by ranking fifth out of the top seven in terms of premium paid per capita with merely USD 6, which against the USD 925 from South Africa topping the list, make the country one of the most attractive with significant upside on premiums growth estimated at 8% per annum and ahead of Kenya that closes the list with 6% per annum towards 2018.
Significant population growth together with raising income and low penetration of insurance products, represent a great potential for both life and non-life products in Tanzania and rest of the region, explained EY’s East and Central Africa Financial Services Advisory Leader, Mr. Steve Osei-Mensah.
Moreover, Tanzania holds the highest rate of population excluding Nigeria, currently above 49 million people, whom are meant to support the industry’s growth, according to EY.
Speaking to the press, EY Tanzania Country Managing Partner, Joseph Sheffu, expressed his optimism in believing it will only take a short time for the Tanzanian market to grow and compete with its peers in the region because of its great potential.
According to Oxford Economics, Tanzania’s gross written premiums (GWP) are expected to grow from the current USD 300 million per annum to USD 400 million by 2018 at a rate of 7.9% per annum.
According to EY, even though the insurance sector penetration in Tanzania is expected to remain below the 1% in 2018, the average spent per capita in insurance is estimated to rise to USD 7.60 from the current USD 6.40, however, with the expected legalization of bancassurance, the sale of insurance products through banking institutions, it is expected to beat largely the forecasted values.
