Dar es Salaam. Lack of capital and skills gap and mismatch in the insurance industry were pointed out as among challenges facing the sub-sector that is still lagging behind in contributing to the economy due to low penetration.
The managing director of the National Insurance Corporation (NIC), Dr Elirehema Doriye, said the capacity of companies on underwriting was still low, meaning that a chunk of insurance business goes abroad because they cannot afford to pay compensation on time.
He said on Friday night during the event organized by Mwananchi Communications Limited (MCL) to celebrate 60 years of independence in the financial sector. The event was themed: Growth, challenges and future of the financial sector.
“Before independence, most users of insurance products were foreigners and a large share of insurance business went abroad, but even after independence the challenges remain, including skills, capital and knowledge,” said Dr Doriye.
However, in addressing the challenges, the government has come up with the Financial Sector Master Plan 2020/2030 that for the first time has provided the framework on what should be achieved in the next ten years.
“For many years insurance has remained as a sub-sector with nothing to aim at, but now we have it,” he said.
In addition, the insurance market still does not have an insurance policy that would create a framework on how to conduct insurance activities, according to him. “So something needs to be done to ensure the implementation of insurance plans brings about the desired results,” he argued.
One of the objective, he pointed out, is to increase number of insurance users from the current 20 percent to 50 percent of adults in the next ten years. He observed that a large number of users currently were based in urban areas, with stakeholders calling for inclusion of all, that is extending the servies to rural areas.
Insurance sector still remains a bit conservative distribution channels. We need to do more in ensuring the accessibility, distribution to be more effective and affordable. Now it is bancassurance where we address the challenge. Bank it has a big pull of customers. The best way is to produce more products based on micro insurance.
On the other hand, Tanzania Insurance Regulatory Authority (Tira) commissioner for insurance Dr Musa Juma shared the same comment: capital is a challenge for the insurance company so that they can provide better products and pay claims to clients. “Capital is a very important factor. There is a need to look at how capital can be obtained using capital markets and other means.”