Assets at risk as voluntary insurance products ignored

Onlookers gather at the scene of an accident at Gongo la Mboto in Dar es Salaam recently. Most daladala passengers do not have life insurance cover. PHOTO|FILE 

By Alawi Masare, BusinessWeek Reporter

In Summary

People tend to insure assets which are legally compulsory and leave the voluntary ones.

Dar es Salaam. Awareness on the importance of insurance is low in Tanzania.

People tend to insure assets which are legally compulsory and leave the voluntary ones.

For example, Kesi Bombwe knows that several insurance products are available, but all he bought is an insurance cover for his boda boda.

The 32-year-old rider hesitates to show the insurance sticker for fear of disclosing that it is out of date.

He lives in Dar es Salaam but his two-bedroomed house is at the finishing stage in Morogoro. Unlike the motor bike, the house is uninsured and there are no plans to do so.

The choice for insuring the Sh2 million motorcycle and not the house, which is relatively more expensive, is deliberate: the former is compulsory. “Without insurance cover, police will harass you and therefore you can’t work freely. So, I have it simply because it’s compulsory by law,” he says.

Mr Bombwe is a typical example of most Tanzanians who do not consider subscribing to insurance products which are voluntary.

Most insured Tanzanians subscribe to legally compulsory services or those already in group policy of corporate organisations they work in and do away with voluntary covers.

According to experts, low awareness and the level of individual incomes against pricing of insurance products may be among the factors affecting the sector. Motor insurance tops the general insurance product mix carrying 32 per cent followed by fire at 20 per cent, health at 17 per cent and accident at 12 per cent, according to the annual insurance market performance report 2012.

Other general insurance classes shared less than 8 per cent each while life issurance, on the other hand, was dominated by Group Life class at 65 per cent followed by individual life at 30 per cent and other life at 5 per cent, according to the report.

“Insurance has never been a a basic need for Tanzanians. Many people are still depending on community assistance to rectify issues during disasters,” says Mr Saqware Abdallah Naniyo, a lecturer on insurance, social protection and risk management at the Institute of Finance Management (IFM).

“However, there is a change with some voluntary services like comprehensive motor insurance which has been growing very fast in the recent past,” he says