Insurance brokers want market minimum capital ratio

DAILY NEWS Reporter

THE Tanzania Insurance Brokers Association (TIBA) has requested a support from commissioner of insurance to determine a minimum amount of capital required of an insurer to support its operations and write coverage.

The minimum capital, Risk Based Capital (RBC), will assist underwriters ensuring a free market based on the strengths of their firms. Four categories of risk are analyzed in arriving at an insurer's minimum capital requirement namely asset, credit, underwriting, and off-balance-sheet.

Speaking at the ceremony to welcome the new Tanzania Insurance Regulatory Authority (TIRA) commissioner of insurance, TIBA President Mohammed Jaffer said that the implementation of RBC will make the market stronger through mergers of smaller players in the market into one strong group.

TIRA Commissioner Dr Baghayo Saqware pledged to work on the issues raised by TIBA but asked them to submit official request and will work out the solutions amicably. “The government priorities towards future of insurance sector in Tanzania is to increase insurance underwriting capacity,” Mr Saqware said.

He added: “in this case we are determined to review our laws if need be, we will want to remove all barriers in order to achieve this goal”.

TIBA, which threw the welcoming ceremony, also requested the commissioner of insurance to the review of capital for broker members since the industry has grown quite well to attract a number of briefcase brokers who feel the investment of 10m/- is very minor to usurp millions in premiums of clients.

“This has to be addressed with higher standards of registration should one want to become a professional broker in this market,” he said TIBA believes that there is a strong need to bridge a gap between market requirement and insurance skills taught at colleges.

“We request an introduction for compulsory internships for insurance students so that they are well equipped after graduating,” Mr Jaffer said.

““Let us use these young men and women in insurance broking firms, we have a role to nurture and foster them from compulsory internship engagement to permanent employment,” TIRA commissioner said.

He clarified on market misconception that brokers can access premium money saying they cannot as the fund goes directly into a trust account. Brokers, according to him, get their commissions after paying to underwriter and they have no objection to the current scheme.