After Africa Insurance Regulator Retreat

Since the liberation of the Tanzania economy in 1990’s, insurance penetration in Tanzania has been continuously growing to 1.68% as at 2021, the ratio slightly increased compared to penetration ration of 1.55% for the year 2020.?This indicator shows that economic growth alone does not drive insurance premium volume; insurance premiums grew at 1.2% between 2019 and 2021. Despite this healthy growth in premiums, the insurance sector in Tanzania remains small in absolute terms and in comparison, with peer countries in the region. At 1.68% of insurance penetration, the market is in an early stage of development. With insurance consumption of TZS 15,334.10 per capita, Tanzania lags behind peer countries of East Africa and Africa at large.

The major challenges the industry has experienced that lead to this slow development of the industry so far is highly product miss selling, the miss selling sometime happen intentionally or unintentionally which impact consumers financially, also damage the industry image in return.

Another challenge the market is experiencing is poor market conduct by market players which is continuously destroying the consumer trust that the regulatory is trying to build over years of exemplary service is offering.

Also, the price war which involving undercutting impact financial capacity of many insurance companies which threatening the stability of the entire insurance sector and the financial sector at large as well as the economy as a whole.????

Despite of the lower growth rate and all the challenge in insurance market in Tanzania, as Insurance Regulatory Authority, TIRA is doing well on its responsibility of licensing and supervising insurance companies, brokers, agents, loss adjusters, and insurance consultants to promote the sound development of the insurance market and protect consumer interests.

Although most important task of any insurance supervisor is to police the insurance market, but as Insurance Regulatory Authority, TIRA is supposed to develop intensive strategy for development, strengthening its legal and supervisory frameworks to enable more efficient supervision of a fast-growing, rapidly changing market, and this can be achieved by having a clear collaboration strategies between the regulator and the market players.

Because without involving the market players in developing strategies, policies or any changes in the regulatory framework, including changes on the Insurance Act 2009, it will be very difficult to avoid these challenges completely given complex and intangible nature of insurance products and due to the fact that insurance service can be only assessed during the payment of claim.

And sometimes the regulatory may fails to identify critical developments strategies in time to deals with challenges and preventing them from causing harm, and sometimes the regulator may lack the power to impose remedial action when particular interests of other stakeholders can influence decisions (e.g., when members of government hold financial interests in, or have family ties with, insurance companies seeking a license etc.).

Also, the decision can be jeopardized if a single large insurance company who have considerable influence, because they provide employment for large number citizens and invest in government bonds. Therefore, required that the regulator be operationally independent, collaborative with market players and have adequate resources and transparence to any procedures it undertakes in making the rules and regulation to the market.

Furthermore, the regulator being part of the public sector regulating market players who majority are private entities competing for profit, the regulator can find itself constrained by civil service procedures that have nothing to do with insurance. And due to the fact lack of specialization team to the regulator office and imbalance intellectual fire power between regulator office and the market makes the regulator not fully comprehend what the industry is doing, prescribe appropriate corrective actions and anticipate what new changes might entail which lead to the constrain of the action regulator need to take.

In such circumstance it is therefore a good idea for the Tanzania Insurance Regulator to establish an independent market development committee that involve individuals working in different institution such as (re)insurance companies, insurance intermediary etc or representative from Association of (re)insurers, brokers, agents, bancassurance and other Association. That will be in charge of reviewing of all the guidelines they have brought to the market the impacts it brings, also such committee will be a communication point between the regulator and the market players regarding different matters the market needs to be addressed.

Also, the committee can act as Insurance Fraud Bureau that will review the fraud level in the market, conduct research that aims at revealing fraud network and recommend on the preventive measures to be implemented to reduce the level of fraud in the market.

Through this independent committee the regulator can be well equipped to drive the evolution of regulatory changes that reflect local market developments and reflect the international good practices and can help the regulator to develop strategies that aim to develop the market and strategies that obtain a buy-in from the government and market as well.?