AWARENESS IS THE KEY

Tanzania 2015 | FINANCE | INTERVIEW

TBY talks to Stephen Okundi, CEO of Real Insurance, on sector trends, and the catalytic effect of education on social inclusion.

Stephen Okundi
BIOGRAPHY
Stephen Okundi is CEO of Real Insurance, a position he assumed in 2010. He has enjoyed a twenty year career in the insurance sector dating back to 1993 and the Insurance Company of East Africa (ICEA). In 1999 he joined REAL’s predecessor, the Royal Insurance Company of East Africa in Kenya as an assistant underwriting manager, and rose through the ranks to become the Chief Operating Officer of REAL in 2008, a role he served until his posting to REAL in Tanzania as CEO. Stephen holds a Bachelor’s degree in Economy from Kenyatta University and a qualified Associate of the Chartered Insurance Institute in London (ACII). He is an associate member of the Chartered Insurance Institute, London, UK, and of the Insurance Institutes of Kenya and Tanzania.

What are your plans to expand your branch network in Tanzania?

We plan to open at least two new branches over the next year. One will be in Mtwara where there is considerable potential due to the discovery of oil and gas. We want to be closer to our customers and also to be able to make use of subcontractors. At the industry level, the regulator is working on a program to ensure that the market is able to tap at least 10% of the large oil and gas business. We have a shopping mall branch in Mlimani City in Dar es Salaam, and are the only insurance company to be open daily, including Sundays and public holidays from 8AM to 7PM. Having seen the potential of the mall, we are planning to open one more branch within the year. Meanwhile, our distribution network simultaneously enables us to reach over 100 outlets nationwide.

You operate in Kenya, Malawi, and Mozambique. What is the importance of the Tanzanian market for the company?

The Tanzanian market is crucial because it contributes roughly 30% of the group portfolio. Tanzania also ranks number two in terms of turnover, and with a staff of 59 people we account for 50% of head office turnover.

What would you say are the main trends within the Tanzanian insurance sector?

The new trend is toward much greater social inclusion in terms of coverage. What we are trying to do is create affordable products that offer comprehensive coverage. A good example is the farming community, for which we pioneered agriculture insurance i.e. tobacco insurance as this is the only crop where we have reinsurance protection. We plan to provide cover for other crops such as rice, maize, coffee, and cashew nuts. We are glad that farmers are finally beginning to see the importance of insurance.

What are the challenges and opportunities unique to the Tanzanian insurance market?

The main challenge is that the uptake of insurance is extremely low compared to other markets, at less than 1%. Moreover, awareness is low, and we as insurers are to blame in some ways. Insurance in our market is at the bottom of the priority list for most people who view it as irrelevant to their lives. Personally, I feel that insurance is the backbone of the economy, without which the financial services sector and all the sectors of the economy cannot function. Meanwhile, reaching the people in the villages is another challenge, albeit bearing within it the opportunity of an untapped market through which up to 47 million people could benefit from a micro-insurance product. Nationwide coverage requires an industry-wide approach including the regulator and the government educating the public on the benefits of insurance.

What would you say are your main achievements in the Tanzanian market and what would you hope to achieve over the next five years?

My main achievement was to double our turnover. In 2010, our turnover was TZS9 billion, roughly $5 million. In just two years we reached TZS16 billion, and in three TZS18 billion, totaling at approximately $11 million. We have managed to pay dividends to our shareholders after five years where no payments were made. Importantly too, we have benefited from a stable team in terms of training and development. Turnover in the insurance sector remains high in Tanzania as the industry lacks adequate number of professionals. I would like to see our turnover reaching TZS50 billion.