Tanzania Insurance Market Background And Regulation
In 1996, the Insurance Act liberalized the market paving the way for private new entrants to the market, until then a monopoly was held by the government’s National Insurance Corporation. These changes successfully attracted foreign and domestic investment to the Tanzanian insurance sector. Most companies are partnerships between foreign companies and local investors, combining external sector knowledge and financing with local market expertise.
The Tanzania Insurance Act No. 10 of 2009 established a general framework for companies operating in the insurance industry. The act was followed by the Micro Insurance Regulations of 2013, the Insurance Ombudsman Regulations of 2013, the Insurance Appeals Tribunal Regulations of 2013, and the Bancassurance Regulations of 2019.
The act and regulations are supplemented by circulars, guidelines, orders, and directives issued from time to time.
The act also created a regulatory and supervisory body, the Tanzania Insurance Regulatory Authority (TIRA). TIRA is mandated among other functions to: a) regulate and supervise the insurance sub-sector and registrants; b) advise the government on insurance and related matters; c) protect the interests of policyholders/consumers; and d) facilitate the development of a fair, safe and stable insurance industry.
The authority is also mandated to register various categories of registrants which include but are not limited to the following: sales force executives (SFEs), Takaful (Islamic insurance) operators, insurance agents, insurance assessors, insurance loss surveyors, insurance loss adjusters, insurance private investigators, insurance brokers, insurance companies, reinsurance companies, reinsurance brokers, bancassurance agents, actuarial firms, and insurance digital platforms.
TIRA also regularly carries out public awareness and education campaigns and consumer education seminars and workshops to increase awareness, particularly for life and general insurance.
Changes in the Regulation of the Tanzanian Insurance Market
In 2021 and 2022, significant changes in the insurance legal framework have been introduced with a view to increasing sector stability and consumer protection.
Worthy of notice are the amendment to the Non-Citizens (Employment Regulation) Act in 2021, and the amendment to the Insurance Act in 2022.
The amendment of the Non-Citizens (Employment Regulation) Act of 2015 in 2021 has relaxed the conditions of giving permits to foreign investors by increasing the number of such expatriates to work in the country from a maximum of five to eight years. On top of that, certain positions are guaranteed to be held by the owners of capital or people of high integrity of their choice as a strategy for protecting investors and their capital invested in the country. That has really created comfort to investors and more are attracted to invest in the country which will add to the stability of the insurance sub-sector and the financial sector in general.
The changes in the Insurance Act through the Finance Act, No. 5 of 2022 widen the scope of compulsory insurance classes to include marine vessels, public markets, commercial buildings, and imported goods (regardless of the means used in transporting such imports). Those were found to be vulnerable areas with losses occurring and affecting people and their properties. The amendments introduced Section 133A in the Insurance Act, No. 10 of 2009 which made insurance for the above-mentioned classes compulsory. The change is meant to increase insurance penetration and protection.
In addition, in 2022 TIRA issued guidelines in the areas of claims management, bancassurance, motor insurance, Takaful, insurance digital platforms, sales force executives, and reporting of insurance and reinsurance contracts (IFRS17).
Investment And Solvency Margin Management Guidelines 2022
The purpose is to enhance the protection of policyholders against the risk of non-compensation when an insurer suffers a substantial loss that cannot be met from its available resources, by ensuring the availability of resources.
Insurance Claims Management Guidelines 2022
The purpose is to avoid unnecessary delays in claims payments hence enhancing the public’s confidence in insurance services, by establishing an effective mechanism for turnaround time for processing and settlement of insurance claims in line with the industry’s best practices.
Bancassurance Conduct of Business Guidelines 2022
The purpose is to enhance the distribution, access, and availability of insurance products and services in the country, particularly to the unserved and underserved population, by ensuring that the insurance business is transacted in every branch of the bancassurance agents, and by introducing other guidelines on effective bancassurance business practices.
Minimum Benefit Structure For Motor Third Party Bodily Injury And Death Guidelines 2022
The purpose is to foster consistency and robustness in claims compensation, given the variances in the compensation rates for victims of third-party bodily injury, by establishing a mandatory minimum payable amount to the claimant.
Takaful Operational Guidelines 2022
The purpose is to increase penetration and contribution of the Islamic insurance subsector to the country’s GDP by ensuring Sharia-compliant consumers are accommodated into the insurance business.
Insurance Digital Platforms Guidelines 2022
The aim of the guidelines is to establish a mechanism for regulating and supervising activities of insurance digital platforms (IDPs), thus encouraging the evolvement of the insurance digital business model in the market to increase insurance uptake.
Sales Force Executives (SFE) Guidelines 2022
The objectives of the guidelines include establishing a mechanism of regulating and supervising activities of sales force executives (SFEs), by ensuring that they are registered by an insurance service provider licensed by TIRA, to increase insurance uptake, particularly in unserved or underserved areas.
International Financial Reporting Standard on Insurance Contracts (IFRS 17) Guidelines 2022
IFRS 17 is an International Financial Reporting Standard that was issued by the International Accounting Standards Board (IASB) in 2017 to replace IFRS 4 on accounting for insurance contracts and has an effective date of 1 January 2023. IFRS 17 requires insurers to restructure their financial reporting practices and financial statements. The guidelines were issued to set out a standardized process for the effective implementation of IFRS 17, and achieve consistency in the application of IFRS 17 across the industry.
In addition, the guidelines for compulsory insurance coverage for public amenities are expected to be ready in early 2023. The guidelines seek to compel the owners of public buildings or facilities to pay compensation to people who have been injured as a result of a disaster that may occur within those buildings.
The new guidelines are in accordance with the Financial Sector Development Master Plan (2020/21 – 2029/30) which guides the financial sector’s reform agenda and complements other efforts to advance private sector investments.
Important aspects of the Plan that will be implemented include:
(i) Broadening financial instruments to advance the availability of long-term capital;
(ii) Incentivizing banks and financial institutions to provide long-term credit to productive sectors;
(iii) Promoting cross-border capital flows to support the efficient allocation of capital to long-term investment;
(iv) Creating financial instruments for Tanzania diaspora to finance long-term projects;
(v) Enhancing the financial, technical, and managerial capacity of DFIs;
(vi) Strengthening affordable housing finance schemes; and
(vii) Promoting insurance companies and social security schemes to mobilize long-term savings.
The Plan also sets ambitious goals for the insurance sub-sector such as insurance coverage for 50% of the adult population and increasing the insurance penetration rate to 5%.