What does insurance mean in an African country like Tanzania?

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.

 

 

What is Rural Insurance and How can it Help Developing Nations?

In many of the developing nations, the urban development is happening at a quick pace, but the rural sector is almost left the same underdeveloped way. This is largely due to the low penetration of the financial products and services to the other end. It is a fact that majority of the rural population in Africa and in Asia still face intense poverty.

Business people meeting to discuss the situation on the market

Those who live in cities and suburban communities have easy access to various financial products and aids such as life insurance, health insurance, auto insurance, property coverage etc. However, people who live at rural area don’t have any access or awareness about such products and also are educationally backwards to identify its scope.

Developments in rural insurance

However, for the last few years, many of the banks and other NGOs, in collaboration with the local governments are working closely towards the development of rural economy. Banks provide various specialised and lenient rural insurance policies, which are customised based on the needs of rural population.

As agriculture, farming, fishing etc. are the major revenue sectors in rural areas, with which the life of the people are closely linked with, the insurance packages mostly centred around these.  There are also government-run health and wellness schemes out there, which are meant to ensure better quality healthcare to the poorest people. Now, rural insurance providers also offer policies for health, motor, property, and other things with special consideration to people living under the poverty line.

Special features of rural insurance

  • With health insurance, the poor population of the rural regions get a choice to select between public or private hospitals for better healthcare services.
  • Intermediaries as non-government organisations and micro-financing organisations can effectively involve in promoting rural insurance by offering education and services to get all class of people covered under insurance.

Rural insurance policies

Farming is one of the riskiest area for rural people to handle, and there are various insurance products to protect the interest of farmers who make a living with it. By having an adequate insurance policy, the farmers can cover variety of their potential risks as farm equipment, livestock, buildings, and work interruptions.

Similarly, the needs of those who are engaged in fishing or other traditional jobs may also vary and insurance providers come up with different policies to fit to the needs of all. Some of the other such insurance policies are for;

  • Livestock as cattle, goat, sheep etc.
  • Sub-animals such as honeybee or silkworm.
  • Horticulture and plantation such as rubber, grapes, orange, condiments etc.
  • Equipment and property as agricultural pump sets, farm vehicles etc.
  • Rural small-scale business assets as shops and other entities.
  • Home insurance.
  • Personal motor vehicles, boat, tractor etc.
  • Personal coverage as workplace accident or death.

Importance of rural insurance in developing nations

The villages of developing nations act as the strong backbone for the existence of the cities and industries by deciding the growth potential of a nation. Not just food grains, but other essentials such as raw materials or even water supply is being initiated from these rural destinations. So, any flaws to this rural production or agricultural loss can adversely affect the development of the nation as a whole, which needed to be effectively covered with rural insurance.

 

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