Dar es Salaam — Tanzania has demonstrated a strong base for the growth of micro insurance market in Africa despite the challenges posed by poverty among the low income earners.
Although majority of Tanzanians are still living under the poverty line level of what the World Bank (WB) maintain as $1.25 a day, the country has proved to have the fastest growing insurance market with a growth of 24%, above an average of 15% for most developing nations, as well as three times more than the country's Gross Domestic Product (GDP).
According to the Tanzanian Insurance Regulatory Authority (TIRA), Chief Executive Officer (CEO) and Commissioner for Insurance, Mr Israel Kamuzora, "Despite challenges posed by poverty among low income earners, Tanzania has demonstrated to have a fertile soil for the growth of micro-insurance market in Africa, one of the indicators that impressed the Making Finance Work for Africa (MFW4A) and Munich Re Foundation to hold the meeting here," he said.
It is the 8th micro-insurance meeting but the 3rd to be held in Africa that will bring together 500 participants from 62 countries. Tanzania qualified after meeting the criteria set by insurance experts following a study carried early this year.
Kamuzora said it was not an easy task to carry through the micro-insurance subject among the poor individuals. It is for example difficult telling a poor person to pay for insurance package instead of buying bread to feed the family.
But the same persons said to be poor, Kamuzora said are the ones owning mobile phones and making the telecom firms transactions high. Thus it is an opportunity for the insurance industry to penetrate their services among the same individuals.
He said the micro-insurance sector is developing at a steady pace. "With 3.3 million people covered by micro-insurance, which represents a growth of around &% in three years, TIRA has been focusing its efforts on raising the awareness." and benefits of insurance amongst the poor, as well as working together with Access to Insurance Initiative (A2II) to stimulate the market through new regulations," said Kamuzora.
Kamuzora noted the key players in driving micro-insurance include microfinance institutions such as Savings and Credit Co-operative Societies (SACCOs), Vikoba, Pride and mobile phone service providers including TIGO, Vodacom and Zantel.
He said the telecom firms have agreements for various insurance packages payable through airtime and other means. "This is working very well," Kamuzora explained.
Another scenario showing positive growth of the sector is the concerted effort put by the regulatory body and other stakeholders in the past three years to ensure that customer' claims are settled on time. "It is currently rare to hear someone complaining over unpaid claims," he observed.
The outcomes of the meeting, according to Kamuzora will revolutionalise the insurance industry in the country by bringing in more players into the sector.
The NIKO Insurance Tanzania Limited Chief Executive Officer Mr Manfred Sibande said insurance industry is urban centre leaving rural areas isolated. "The meeting will provide milestone for the penetration of micro-insurance into the rural areas to tame poverty among societies," he said.
The Micro-insurance Network promotes development and delivery of effective insurance services for low-income people by encouraging shared learning, facilitating knowledge generation and dissemination, as well as providing multi-stakeholder platform.
A recently published study on African micro-insurance markets shows that the number of low-income households benefiting from insurance services has grown significantly in the last three years.
The study done by the Making Finance Work For Africa (MFW4A) and Munich Re Foundation established that during the last three years over 44 million people have benefited from insurance services, which reflects a growth rate in excess of 200%.
"This is a tremendous achievement. The expansion of quality insurance services to large numbers of low-income households can have a significant role in achieving the Millennium Development Goals (MDGs)," says an expert with ILO, Mr Craig Churchill, who is also the Chairperson of the Micro-insurance Network.
MFW4A Partnership is an initiative to support the development of African Financial Sectors.
It is a unique platform for African governments, the private sector, and development partners to coordinate financial sector development interventions across the continent, avoiding duplication and maximizing developmental impact.
The MFW4A has its secretariat at the African Development Bank (AfDB) headquarters in Tunis, Tunisia.
"One striking issue highlighted in the study is that the vast majority of Africans with insurance coverage, that is to say, close to 40 million people, are covered by life insurance.
Partnership Co-ordinator of MFW4A Mr Stefan Nalletamby, said the other insurance products, related to health, agriculture, accident and property, are not as developed on the continent, which is inconsistent with the demand, especially for health insurance.
In geographical terms, the study noted that over 38 million of the insured people are concentrated in Southern and Eastern Africa, with South Africa alone covering 27 million.