Tanzanians exhibit a huge appetite for life assurance - The Citizen

By Gadiosa Lamtey

Dar es Salaam. A number of Tanzanians have showed a huge appetite for life assurance cover as more and more keep joining in groups to access the service, all thanks to tailor-made marketing approaches by bancassurance agents, latest data reveals.

Tanzania allowed banks to sell insurance services on behalf of insurance firms (bancassurance services) in 2019.

In 2020, Tanzania Insurance Regulatory Authority (Tira) issued its first bancassurance registration to seven banks but so far, the number has increased to 24.

Data from Tira shows that during the third quarter of last year (2021), gross premium written (the total amount that customers paid for insurance coverage on policies issued by insurance companies) – under the life assurance category – accounted for 76.5 percent of all the money that was collected in that particular aspect.

A total of Sh47.497 billion was garnered for the life insurance business between July and September 2021. Out of which, Sh36.32 billion was garnered through bancassurance channels.

In what explains the impact of community groups in the advancement of life assurance products, out of the Sh36.32 billion that was transacted through bancassurance during the period, Sh35.394 billion – which represents 90.3 percent of the proceeds – was garnered through group life assurance products.

The money came from both formal and informal community groups, including Village Community Banks (Vicoba), WhatsApp and other networking groups as well as Savings and Credit Cooperative Societies (Saccos).

In the general insurance category, bancassurance netted Sh19.055 billion during the period, representing only 9.7 percent of the gross premiums totalling Sh195.74 billion that was transacted during the period. The lion’s share of the money was collected as motor vehicle insurance.

Analysts say the numbers explain the innovativeness that banks have brought into the marketing of insurance products under the bancassurance arrangement. “Banks did well in the group life assurance due to their innovation in the product promotion style. The promotions come in ways that touch directly on people’s lives. They are also made available at low costs,” said CRDB Bank’s bancassurance head Moureen Majaliwa.

She said bancassurance was on the right path to becoming a major distribution channel for insurance products in the country, promising that CRDB Bank Plc would also come up with more innovative products.

“The plan is to ensure every Tanzanian makes use of at least one insurance policy through our bank’s large network across the country,” she said, noting that insurers and banks need to work together to to mitigate financial risks in an effort to step up financial inclusion in the insurance sector.

The head of bancassurance at Tanzania Corporate Bank (TCB), Mr Francis Kaaya, attributed the performance to an increased public awareness of the benefits of funeral insurance; simplified language used by banks in advertising the products as well as the elimination of strict conditions that groups were required to have in order to get access to life assurance products.

“For the case of TCB, we have been providing funeral cover for about nine months now yet we have managed to register nearly 3,000 groups on our group life products. This is a big achievement and we are in a good direction in this business,” he said.

He said there were all indications that the message has clearly sunk into the heads of clients who have been coming in their large numbers to seek such services to TCB.

“What I can say is that the future is bright for bancassurance but as advised by Tira, we are also putting more focus on individuals so that we can increase penetration and awareness,” he emphasized.

The director of surveillance and prudential supervision at Tira, Ms Neema Lutula, said so far so good as the number of people accessing insurance services was on the rise.

“We are only asking for more emphasis on individual life assurance where there is also a huge potential and prospective for the industry,” she said. Much more, she said, could be done on both life and general insurance businesses to improve insurance market penetration and the contribution of insurance to gross domestic production (GDP).

The government, through its Financial Master Plan, wants to ensure that by 2030 at least 50 percent of Tanzania’s adult population has access to one insurance product. Also 80 percent of Tanzanians must also be able to know about insurance services.