The Tanzania insurance market is still very much untapped and even as the country achieves middle-income status, much of the population is still not insured.
Commercial banks in the country have smelt opportunity in the industry and are now circling in. CRDB Bank, a leading bank in Tanzania, recently announced plans to register its own insurance subsidiary firm.
The bank is currently already a broker and enjoying considerable premium back payments which almost double in the span of just 3 years (2016-2019).
In an interview with local media, CRDB’s Broker General Manager, Mr Arthur Mosha said in that short time, their premium levels is up from 44.2B/- (US$19.088M) from 25B/- (US$10.81M).
Not surprising, Tanzania’s insurance market grew by 8.6 percent in gross premiums over the course of the last financial year. As of 2018, Tanzania’s insurance industry had 31 insurance companies, 109 insurance brokers and 635 insurance agents.
For a country of 56 million people, the sector is hardly sufficiently serviced and there is enormous room for growth.
Also read: How Tanzania marked 5.7 per cent growth Q1 2020
The bank’s brokage services target mainly their own customers who now represent 70 percent of all their insurance customers. At the moment, the leading products that they offer include but are not limited to life coverage and health insurance.
The bank also offers comprehensive general coverage and innovative packages like the Educare package that offers both life insurance and a saving window all in one package that is mostly suitable for college students.
Already the firm has up to 40 personnel handling insurance services across some 300 bank branches spread across the country. Over the last decade alone, the bank has seen its premium increasing from 800M/- (US$346,020) in 2011 to 12B/- (US$5.19M) in 2014 and almost doubling by last year when it clocked 25B/- (US$10.81M).
CRDB’s growing interest in the insurance services sector serves to highlight the sector huge untapped potential. Many Tanzanians go about their daily lives with no insurance at all. Other than the common health coverage offered by employers in as part of their benefit packs, few people bother to get insurance coverage.
On the one hand it is lack of awareness on available insurance packages and their benefits while on the other hand it is a misconception that insurance is very expensive. Increasingly there are micro-insurance plans for even the lowest income groups of the community but the public is yet to show interest, another business opportunity all on its own.
As is the case with most of Africa, Tanzania has rather low insurance penetration because of low income but this is exactly the same reason why banks and other stakeholders are now eyeing the sector. By developing micro-insurance packages, then the companies can tap into the growing market that currently exceeds 50 million people.
Most of these people live in rural Tanzania and are peasants, so if the banks can develop say agriculture insurance packages and smaller health insurance packages then they can tap into this market.
Worth noting is the huge mobile phone penetration that with it comes the power of mobile money. It then means, investment to reach rural communities no longer has to be so drastic, after all you do not need to set up permanent buildings anymore, all you need is awareness campaigns and the farmers can pay for their insurance via their mobile phones.
Source: The Exchange