On 11th December 2017, the Tanzania Insurance Regulatory Authority (TIRA) issued a circular setting new conditions for dealing with foreign reinsurers and reinsurance brokers on reinsurance matters, as well as introducing new regulatory requirements.
In particular, effective 1st January 2018 no long-term insurance business written in Tanzania shall be externalized and long-term insurers shall endeavor to place locally all long-term business written in the country through reinsurance with locally registered reinsurers.
In addition, all foreign reinsurance arrangements must have a prior approval of TIRA before implementation by insurers. In this regard, all draft reinsurance treaties must be submitted to the Authority not later than 30th September of each year for review and approval.
An insurer seeking to externalize an insurance risk must now endeavor to use the services of locally registered insurance brokers to the extent of intermediation between the insured and insurer.
All foreign reinsurers seeking to transact insurance business with Tanzanian registered insurers must now earn an Accreditation Clearance Letter from TIRA which will be issued to successful applicants.
In addition, all Tanzania registered insurance or reinsurance companies must undergo periodic credit rating by an independent reputable rating agency to establish its financial soundness at least once in every three years.
TIRA deems the changes necessary as it has observed, with great concern, abuses of reinsurance arrangements by some insurance companies that externalize 100% of risks which could partly be retained locally, and a tendency by some insurers to engage in co-insurance arrangements with sister or parent companies based in other jurisdictions.
The Tanzanian insurance sector consists of 30 insurance companies and 112 insurance brokers currently operating in the market.
According to TIRA, general insurance gross premiums are expected to grow by 33% by 2017 to reach TZS659bn, while life insurance gross premiums are expected to grow by 37% by 2017 to reach TZS82bn.
