Overall Region Overview:

The chief attraction of East Africas insurance market is that it is sizeable and practically
untapped. The insurance penetration rate among East Africas nearly 270 million inhabitants
hovers between 0.2 and 4.0 percent in each country. In Ethiopia and Tanzania, a tiny
percentage have access to insurance such that penetration rates do not surpass 2.5 percent
of GDP. These rates barely compare to the 16 percent observed in South Africa
The unimaginable rates are a result of years of constant political turmoil and economic
efficiency. But political stability and stable growth bids well for the region and sector.
The performance of the insurance industry highly depends on the performance of the
economy. Industry insiders anticipate the region could see growth in the range of 15 to 20
percent on the back of robust economic growth in almost all of the markets.
Premium growth will play a major role in the growth of the entire sector as premiums will
potentially grow more than 15 percent in certain markets. Premium growth is great for
returns, but growth in clientele possesses greater potential as East Africas consumer class
emerges.
Compulsory insurance provisions, in countries such as Kenya and Rwanda, help broaden the
base that insurers capture
In the East African region there have been huge discoveries of oil and gas in Uganda, Kenya
and Tanzania. Oil and gas is a highly specialised class of insurance and reinsurance, and
offers an opportunity to develop and promote [relevant] insurance lines.
Another opportunity is the growing middle class in the region, where companies plan to
tailor some of our products to suit their needs.
Fire and engineering are the largest classes of business in the East African insurance market,
and the reinsurance business has seen a big uptake in these fields.
A demand for engineering insurance has come as a result of road construction projects in
the region, and this has been especially evident in the last five or so years. Fire insurance to
cover property development has also increased along the same lines.
Failure by insurers to honour their obligation in settlement of claims in time, as agreed
terms and conditions of the insurance contract has discoloured the importance of insurance,
especially on health covers
The growth of insurance share will be aided by the growth in information technology and
communication (ICT) and infrastructure so that a wider span of the population could be
reached.
Region is seeing a wider distribution of life insurance products through new channels like
banks, Nevertheless, there are various challenges to push for further penetration, which
include lack of incentives from the government for life insurance products and lack of
adequate skilled human resources
Absence of information on the insurance market in Africa is a main source of reluctance for
insurance firms wanting to tap into the continents potential market.
Access to reliable data is the first port of call for insurance companies with the intention of
entering the African market. Thorough research into the products that are needed is
another, which will vary from region to region
Educating people and getting consumer awareness about the benefits of insurance that is
lacking in the lower end of the market in Africa, including South Africa
Recent Developments:
A number of insurance firms and financial services firms have been on an acquisition spree to
consolidate their market share and broaden revenue source:
Pan-African reinsurer Continental Re is seeking new deals in East Africa in a new wave of
mergers, acquisitions and share deals that promises to shake up the blocs insurance and
reinsurance market.
Britam acquired 99 per cent of Real Insurance in December 2012 in a cash-and-share swap
deal valued at Ksh1.4 billion ($16.4 million).
Reuters quoted South Africa insurer Sanlam as saying it would increase its stake in the NSE-
listed Pan African Insurance Company. The announcement came only a week after Sanlam
said it had closed a deal to acquire a 50.3 per cent in Niko Uganda as part of a deal that saw
it acquire a 49 per cent stake in Niko Groups insurance business in Uganda, Malawi,
Tanzania and Zambia.


Tanzania Insurance Market Overview:

Product Mix:
General Insurance product mix shows a share of Motor insurance business at 32 percent. This is
followed by Fire: 20 percent, Health: 17 percent and Accident: 12 percent. Other general insurance
classes shared less than 8 percent each of total General insurance business. Life assurance, on the
other hand, was dominated by Group Life class at 65 percent, followed by Individual Life 30 percent,
and other life: 5 percent, in that order
Industry Players:
During the 2012, the Tanzania insurance industry had a total of 28 insurance companies (including 1
reinsurance company), 79 insurance brokers, 262 insurance agents and 39 loss assessors &
adjusters.
Underwriting & Profitability:
The general insurance underwriting result deteriorated to an underwriting loss of TZS 11.9 billion
compared to previous years loss of TZS 8.3 billion. The insurers recorded a combined ratio of 107
percent in 2012, being above the maximum early warning test ratio of 100.0 percent. From an
underwriting perspective, general insurers operations were unprofi table during the period under
review.
The underwriting result has consistently deteriorated over the last three years, suggesting a need for
insurers to improve their underwriting practices, including considering reviewing the applicable
premium rates not only in motor but all classes of General insurance.
From an investment point of view, general insurers attained investment income amounting to TZS
15.6 billion in 2012, having decreased by 36.7 percent compared to an investment income of TZS
24.6 billion earned in 2011. Meanwhile, the insurers attained a return on equity of 4.0 percent in
2012, compared to a return of 12.6 percent prior year. The lower return on equity in 2012 is partly
attributed to a less favourable underwriting result and lower return on investment during the year
under review.
Asset Position & Investment Portfolio As at the end of the underwriting year 2012, total assets of
insurers had increased by 8.3 percent to TZS 450.5 billion from TZS 416.1 billion of the previous year.
Total insurers investments increased by 2.7 percent from TZS 291.9 billion in 2011 to TZS 299.5
billion in 2012. The largest share of insurers investment assets comprised Term Deposits (39.0
percent), followed by Real Estate investments (22.0 percent), Government Securities (12.0 percent),
Demand Deposits (8.0 percent), Listed Shares (6.0%), and Investments in Related Parties (6.0
percent), in that order. Other investments shared less than 4.0 percent each.
Challenges
Although the insurance sector recorded a modest performance during the year under review, the
sector was faced with several challenges. The Authority put in place some measures to address each
challenge faced as outlined under Section 4 of this report. The challenges included:
(i) Absence of a national policy on insurance: Lack of a national policy on insurance continues to
deny the insurance industry with the necessary opportunities for growth and building its capacity for
creation of national underwriting. This has an adverse impact on the industrys contribution to the
national economy.
(ii) Premium rate undercutting: some insurers charged unreasonably low premium rates for certain
classes of insurance, especially motor. This has potentially eroded the capacity of the insurers in
servicing contractual fi nancial obligations such as payment of admitted insurance claims due to poor
reserving practices. Insurers are exposed to reputational risk in this regard.
(iii) Poor claims servicing practices by some insurers potential for negative image of the industry
and exposure to reputational risk.
(iv) Shortage of insurance professionals in the industry especially in certain key disciplines including
actuarial science - due to lack of local training institutions which offer relevant qualifications.
(v) Delay in adoption of banc assurance as an alternative distribution channel for insurance services
This matter involves TIRA and Bank of Tanzania as regulators of insurance and banking industries,
respectively.
Future Outlook
Despite the various challenges facing the insurance industry, the sector has good prospects for
growth and improvement in the future. The following are some prospects for the industry:
(i) Formulation of the National policy on insurance: The process of formulation of a National policy
on insurance is underway. Once put in place, the policy will provide a strategic direction for the
insurance industry.
(ii) Banc assurance: Realisation of banc assurance in the market will pave the way for participation of
banks in distribution of insurance products to remote parts of the country. With a supervisory
college between Bank of Tanzania and TIRA, any risks attached to this practice can be easily
managed.
(iii) Micro-Insurance: There are positive developments in the market towards establishing a
Microinsurance industry in Tanzania.
(iv) Pursuit of e-supervision of the insurance industry by TIRA: This will improve the regulatory
efficiency and effectiveness thus allowing more resources for further development of the sector.
(v) Enhanced prospects for further growth of the life insurance sector: Regulation of the pension
sector in the country provides, among others, for admission of private pension schemes that can be
insured by life insurers.
(vi) Vast un-tapped markets: Rural areas provide substantial growth potential for the industry.
(vii) Regionalization of the insurance market within EAC: This will potentially increase opportunities
of investment by Tanzania insurers beyond borders.
(viii) Establishment of an Insurance Ombudsman: This is a quasi court on insurance claims which
will not only speed-up insurance disputes resolution but will also enhance our image in the public
eye.
(ix) On going studies with a view to introducing Takaful Insurance in Tanzania.
(x) Enhanced efforts for public education on insurance products and services: This will increase
public knowledge on the available insurance products and services, thus widening and deepening
the use of insurance services by members of the public.
Insurance Market Growth
The Tanzania insurance industry grew by 17.9 percent to TZS 406.6 billion in 2012 from TZS 344.7
billion in 2011. The growth of the insurance industry was broadly consistent with the growth of the
national and the finance intermediation sector GDP during 2012.
It is noted that whereas the insurance industry grew at an average annual growth rate of 21.1
percent during the last fi ve years, the national GDP and the fi nance intermediation sector GDP
grew at nominal annual growth rates of 16.2 percent and 18.3 percent, respectively. This indicates
that the insurance sector has experienced a higher growth annual growth rate than the wider fi
nance intermediation sector and the national GDP.


Contribution of Insurance to National Gross Domestic Product (Insurance Penetration)
Tanzania insurance penetration (premiums as a percentage of GDP) increased from 0.8 percent in
2011 to 0.9 percent in 2012.

Insurance Premium per Capita (Insurance Density)
The Tanzania insurance premium per capita grew by 13.4 percent to TZS 8797 in 2012 from TZS
7,755 in 2011.



Uganda Insurance Market:
Industry research shows that Uganda market saw an increase in penetration (contribution of
insurance to GDP) in 2012 to 0.66% up from the 0.65% it had stagnated at over the past few years
There has also been consistent premium growth over the last few years. The Gross insurance
premium written (according to provisional figures) in 2013 was 401.99 billion up from the 351.23
billion and Ushs 296.44 billion recorded in 2012 and 2011 respectively.
In terms of composition, non-life insurance business registered a growth in gross premium income of
19.34% from Ushs 262.24 billion in 2011 to Ushs 312.97 billion in 2012 while Life insurance business
registered a growth of 8.62% from Ushs 34.58 billion during 2011 to Ushs 37.57 billion in 2012.
There has also been some growth in the amount insurance companies are paying in (general,
medical and life) claims with over Ush. 140 billion recorded in 2013 up from the estimated Ush. 115
billion in 2012.
There has also been consistent premium growth over the last few years. The Gross insurance
premium written (according to provisional figures) in 2013 was 401.99 billion up from the 351.23
billion and Ushs 296.44 billion recorded in 2012 and 2011 respectively.
In terms of composition, non-life insurance business registered a growth in gross premium income of
19.34% from Ushs 262.24 billion in 2011 to Ushs 312.97 billion in 2012 while Life insurance business
registered a growth of 8.62% from Ushs 34.58 billion during 2011 to Ushs 37.57 billion in 2012.
There has also been some growth in the amount insurance companies are paying in (general,
medical and life) claims with over Ush. 140 billion recorded in 2013 up from the estimated Ush. 115
billion in 2012.
All licenses are issued by the IRA and the training arm of the Industry is the Insurance Institute of
Uganda (IIU). Uganda Insurers Association (UIA) is one of four trade associations in the industry and
is the umbrella body for all Insurance and Reinsurance companies in the country.
Non-Life gross premium written 2011-13 in 000 shillings

Life Premium written 2011-13 in 000 shillings

Key developments:
The separation of life and non-life companies introduced by the Insurance (Amendment) Act 2011
and goes into effect on 1st January 2015. Six (06) of the twenty two (22) licensed insurance
companies are affected by this Law.
In an effort to ensure training, professionalism and continuous enhancement of expertise within the
industry, IRA has taken steps to effect the already existent requirement that an insurance company
only employs two (02) expatriates (not including accountants) and at least one of the top two
executives in each company should be Ugandan.
In accordance with the Insurance (Amendment of Insurers and Reinsurers Minimum Paid-up Capital)
Regulations, Statutory Instrument 22/2013, the minimum paid-up capital for insurance companies
was amended from Ugx.1 billion to Ugx.4 billion for non-life insurance companies, and Ugx.1 billion
to Ugx.3 billion for life insurance companies, Ugx. 2.5 billion to Ugx.10 billion for reinsurance
companies and from Ugx.55 million to Ugx.75 million for insurance broking companies.