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TBY talks to Israel Kamuzora, Commissioner of Insurance at the Tanzania Insurance Regulatory Authority (TIRA), on the regulatory framework, increasing penetration, and growth sectors.
BIOGRAPHY
Israel Kamuzora has been an insurance regulator since 2001, having set standards for Tanzanian insurance market conduct. He joined the Regulatory Office in 1998 as Director of Technical Services, and has been instrumental in establishing an effective insurance supervisory function. Previously, he had been an underwriter, product developer, and surveyor with the National Insurance Corporation of Tanzania. He is a Fellow of The Chartered Insurance Institute of London, and The Insurance Institute of South Africa. Among other functions, he is a council member of the Institute of Finance Management and a board member of the Capital Markets & Securities Authority, and was President of the African Insurance Organization from 2009 to 2010. He holds an MBA in International Business.What has been done to ensure the insurance industry continues to grow and meet market demand?
The growth of any insurance industry depends mainly on two or three factors. One is that you have the right regulatory framework in place, meaning that people who wish to invest in the market are confident that their investments will be protected. The second factor is the policyholders themselves. If they feel that the company will be there to pay their claims, more people will purchase insurance once they feel the investment is stable and protected. Another factor that determines growth is the economy itself. If a country's economy is doing well, the insurance sector will also do well.
Are regulations in place to protect consumer products?
Every company or investor in this market has to comply with regulations and legal requirements. You need an adequate amount of capital to channel into the business, and the right staff to run it. Our office supervises market conduct, as well as the prudential fitness of the companies operating in it. We are there to make sure that these businesses are there to pay claims and honor the obligations and promises they make to their customers. These are the criteria ensuring that those that want to buy insurance, or invest in this kind of business, can be confident of their return at the end of the day.
What is being done to increase insurance penetration?
Our penetration rate is at 1%, which is common, given that we are a developing market. Most of the emerging markets range between 1% and 2%, and below 3%. One reason for such low penetration is the culture itself, because insurance is something that you have to believe in. It is a consideration the benefits of which require visibility to be trusted and depended upon. In Tanzania, we do not have a savings culture like in Japan or India. There, the savings ratio to GDP is around 16%, whereas in a country like ours the percentage is no more than 5%. The lack of education and awareness is another factor curbing our penetration levels. Poverty is another major issue. To be able to consume insurance, you need disposable income. And naturally, if you are living within or below the poverty line, you have none. These are the factors that have been affecting the penetration ratio of insurance in Tanzania as a percentage of GDP.
Which sector is set to see the highest growth?
We want to grow the life sector because we believe it is capable of determining insurance penetration more easily, and can generate and channel more savings for investment. The life sector can also develop when the investment vehicles in or around the country are yielding a return. This enables you to assure the consumer that a life product will bring a return on investment. The products we are selling inevitably address the issue of death. However, we want to introduce products that also underline the concepts of saving and investment such as unit-linked policies. With these products, when someone buys life cover, the money paid as a premium on a monthly basis is attached to a certain investment. That investment is also listed on the stock exchange. Profits made are returned to the life policy.
What is your vision for the Tanzanian insurance market for the next five-to-10 years?
We believe in insurance just as people believe in banking, or other financial services. Through these vehicles, countries will be able to address the issues of poverty reduction and wealth creation. We want insurance to become a tool toward that end, which is where the issue of micro insurance comes in. Low-income citizens need to be able to improve their lives through micro insurance products, and micro insurance is now on the agenda of every meeting that we attend on this continent. Countries like India and Bangladesh were able to emerge from poverty through micro finance and micro insurance.
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