`Micro insurance, security for poor`

By Lusekelo Philemon

12th November 2012

Israel Kamuzora

Tanzania is currently working on the best approach to increase the micro insurance coverage so that low-income earners can easily access it.

The Commissioner of Insurance at the Tanzania Insurance Regulatory Authority (TIRA), Israel Kamuzora, made the remarks over the weekend in Dar es Salaam at the just concluded International Microinsurance Conference, which attracted more than 500 participants and experts from across the world to address the challenges of micro insurance.

“Microinsurance in Tanzania is still at an infant stage, but we’re grappling to make it effective to impact low income earners in the country…” Kamuzora said.

“We have drafted regulations which are specifically for microinsurance set to start by January next year…” explained the commissioner.

“The idea is to have better strategy that will make low income earners in urban and rural areas have access to micro insurance coverage…” The commissioner also pointed out that the country’s insurance’s legal framework was good and in his opinion it is a win-win situation between the service providers and people at the grassroots levels.

Recent EU statistics show that Tanzanians are poor and one third of them are below the poverty line, using less than one US dollar a day (about 1,000 Tanzanian shillings). But apart from that, less than 10 per cent of Tanzanians have insurance packages but a growing number is accessing the risk prevention service via their mobile phones.

Nonetheless, the contended commissioner mentioned that the country’s insurance sector is performing above average and growing at the rate of 20 per cent.

There is growing intereset in the industry with mobile companies issuing special insurance packages to the poor such as Faraja insurance services from Tigo and Vodacom but awareness and participation is still significantly low.

Yet according to Kamuzola, a recent country’s diagnostic study showed that, Tanzania has great potential for microinsurance.

“…hence it is vital that we come up with a special approach that will make insurance companies get to otherwise marginalized poor…” asserted the commissioner who also pledged to carry out more awareness campaigns and plans are well underway for a five-year financial programme to educate Tanzanians on the entire financial system.

The chairman of the Micro Insurance Network, Craig Churchill, pointed out the importance of microinsurance sector in East African countries, taking into account that the region is vulnerable to climate change and its related factors.

He urged African countries to create a friendly legal framework for the micro insurance sector to flourish and benefit the poor, who cannot be easily covered by the traditional insurance schemes.

A new study of African microinsurance markets, published by Making Finance Work For Africa (MFW4A) and Munich Re Foundation, has revealed that the number of low-income households benefiting from insurance services has grown by over 200 percent in three years to the excess of 44 million people.

From a global perspective, the microinsurance sector is moving forward at considerable speed. In Latin America and the Caribbean, another recent study identified over 40 million low-income people covered by microinsurance and the publication of the second edition of the Microinsurance Compendium should continue to fuel additional interest in the sector.

There are nearly 220 organisations providing microinsurance in Africa and there is growing interest to tap into the low-income market. But over 38 million of the insured people in Africa, are concentrated in Southern and Eastern Africa with South Africa alone representing 27 million of these.

In Tanzania, the microinsurance sector is developing at a steady pace and there are now some 3.3 million people covered by microinsurance which represents a growth of around 7 percent in just three years. Still, in a country of over 45 million, the Tanzanian regulatory authority has its work cut out particularly in raising awareness as well as stimulating the market through new regulations.

SOURCE: THE GUARDIAN