The term ‘insurance’ was coined by the Financial Sector Deepening Trust which consists of risk management and coping mechanisms. The primary objective of an insurance scheme in a country like Tanzania is to facilitate the needs and requirements of micro, small and medium scale enterprises and weaker sections of the society in Tanzania.
Fin Scope Tanzania
According to a report submitted by the Fin Scope Tanzania 2013, the action of taking up insurance increased from 6.8% to 13%. The studies revealed that the growth of the insurance sector was solely focused on the health insurance and it is one of the major causes for the growth of National Health Insurance Fund (NHIF) and the Community Health Funds (CHF). The report also suggests that it prevented access to products such as education insurance, funeral as well as personal accident covers.
Causes for low growth of insurance industry in Tanzania
The growth of insurance industry in Tanzania is currently hampered by two major problems such as low demand for insurance and lesser growth of insurance. The esteemed customers of Tanzania had a pre-conceived notion about the term ‘insurance’. They were not well acquainted with the benefits of insurance and how it actually works which ultimately contributed towards a low demand for insurance. Low growth of insurance occurred primarily due to insufficient distribution channels for insurance, lack of skilled insurance personnel and inadequate product offerings, especially in Micro Insurance.
The insurance penetration target was about 30% back in the year 2016. The National Financial Inclusion Framework or in short (NFIF) need to focus on the above-mentioned issues and implement steps to limit the constraint in the field of the insurance industry in Tanzania.
In the year 2015, the Financial Sector Deepening Trust appointed National Micro Insurance Coordinator to work with investment banks like Standard Chartered Bank, Tanzania along with Tanzania Insurance Regulatory Authority and Technical Working Group of Tanzania. Their main objective is to ensure smooth functioning of the insurance industry by working with National Micro Insurance Coordinator.
The Micro Insurance Acceleration Fund introduced BIMA challenge with the objective to enhance the growth of Micro Insurance in Tanzania. They primarily focus on spreading the awareness of this risk management tool among the local residents of Tanzania. The company plans to launch insurance education via National Insurance Education Strategy (NIEC). It was one of the major initiatives introduced by the National Insurance Education Committee to project the issue of low demand for insurance in Tanzania.
Tanzania Insurance Regulatory Authority in joint collaboration with the Financial Sector Deepening Trust (FSDT) and Fin Mark trust has developed a new project named Tanzania access to Insurance diagnostic. They are currently on the path of expanding insurance sector to the outside world.
Facts of Health Insurance in Tanzania
A study revealed that health insurance is currently one of the preferred insurance products especially among the weaker sections of the society. But there is only limited access to health insurance.