New Insurance Law introduced in Tanzania

FARAJA MGWABATI, Dodoma, 25th April 2009 @ 11:30.
THE DAILY NEWS (TANZANIA)

New insurance law to benefit public
Tanzanians stand to benefit from the new Insurance law that has been passed by the National Assembly this week whereby Insurance Companies (Insurers) will be forced to pay their customers’ claims within 45 days of occurrence of an accident.

The new law, Insurance Act 2009, has come at the moment when there are many cases of accidents happening in the country while victims are left without compensation, otherwise the compensation process takes years.

The Deputy Minister for Finance and Economic Affairs, Omary Yusuf Mzee told the National Assembly on Friday that the new law is meant to protect the users of insurance services who for long have been complaining about how they were treated by Insurers.

“This law gives teeth to the Commissioner of Insurance (CI) to make sure that the insured get their claims within 45 days...We have done calculations and found that 45 days are enough to process payments,” he said.

Mr Mzee said if the Insurers fail to pay claims within the stipulated period the CI has power to assess the reasons, if proved genuine, the CI is entitled to add a few days (not exceeding 45) or if the reasons are not genuine, the Insurance company will be fined not more than 5m/- on top of the claim.

He said under the new law, the Insurance Appeal Tribunal and Tanzania Insurance Regulatory Authority would be established to enable Insurers, brokers and customers to file their appeals when they are not satisfied by CI’s decisions and customers submit their complains.

To give Tanzanians a chance to participate in the insurance business, he said the law requires Tanzanians to have at least 33 per cent of the stake in those companies. “Insurance is a business, if we (Tanzanians) can not invest in it, the whole industry will be dominated by foreign investors that is why we are giving at least one third of companies ownership to Tanzanians,” he said.

He said Insurance companies would be forced to declare to the public their financial accounts to enhance accountability and good governance within the industry. “Another good thing about this law is that it provides wide ranges of insurance cover including the marriage cover…We are used to seeking help from colleagues for donations when you want to get married, but with marriage insurance when you are 18 you start saving,” he said.

The Deputy Minister said the government would finalize reforms to stabilize the National Insurance Corporation (NIC) to enable it to compete efficiently in the market and provide better services to the public. Debating the Bill, some Members of Parliament advised the Minister to provide education to Tanzanians on the importance of insurance services in life and attract them to participate as investors.

Responding to the comments, he said it was true many Tanzanians including MPs did not give greater importance to insurance services and those who cared about their health or properties only took third party insurance which does not help them much. “Its true we need to educate our people...I hope MPs you will help the government to sensitize the public on that,” he said, adding that people should take a comprehensive insurance covers. The new law if endorsed by President Kikwete would replace the Insurance Act of 1996 chapter 394.

STAFF WRITER, 5th May 2009 @ 00:00, (Excerpts).

After a decade since its liberalisation, the insurance industry is now poised for robust and sustainable growth following changes on the law to boost efficiency and accountability.The National Assembly recently pass the Bill for the Insurance Act 2009, which among other things, provides for settlement of claims after 45 days and establishment of the appeals tribunals.Tanzania's insurance industry had for three decades since 1967, been under the hegemony of the state, where there were only two players in the market.

The market in Tanzania mainland was the monopoly of the National Insurance Corporation (NIC), while in the the Isles, the Zanzibar Insurance Corporation (ZIC) was the sole operator. Tanzania’s Insurance Industry was liberalized in 1996 with the objective of making it a sound and competitive agent for national saving mobilization and development of investment channeling.

Other reasons included promoting insurance sector as an effective catalyst for enhanced economic growth, strengthening and promoting the industry health and orderly growth through establishment of operating performance standards and prescriptions.There are now about 18 insurers, a reisurance company, dozens of brokerage firms and over 500 agents and loss adjusters in the domestic market.

Some of the insurance companies and brokerage firms operating in the country have connections with world-class houses that provide a myriad of products."We are in a situation where you are covered for various risks. You have life and health assurance, motor and property coverage. There is now more security," said Salum Hussein a Dar es Salaam agent.

Some analysts say the proposed law comes at a moment when there are many road, fire and other kinds of accidents happening in the country, while victims are left for long without compensation.

“This law gives teeth to the Commissioner of Insurance (CI) to make sure that the insured get their claims within 45 days...We have done calculations and found that 45 days are enough to process payments,” Deputy Finance and Economic Affairs Minister Omar Yusuf Mzee told Parliament in Dodoma while moving the bill for its second reading.

Mr Mzee said the proposed law empowers the commissioner to extend the period for settling a claim upon being furnished with genuine reasons, as well as punishing defaulters.

An insurer, for example, may end up coughing 5m/- on top of the claim for non-compliance.The proposed law has adopted the principle of the industry's ombudsman, under which stakeholders with complaints against the commissioner could be handled.

It provides for establishment of the Insurance Appeal Tribunal and Tanzania Insurance Regulatory Authority to enable Insurers, brokers and customers file appeals when they are not satisfied by commissioner's decisions.

The law requires firm's to allocate at least one-third mandatory stake to Tanzanians for it to secure registration. "This is a deliberate move to empower Tanzanians take part in the lucrative industry," Mr Mzee noted.

Analysts say the proposed law consolidates the regulatory framework enshrined in the Insurance Act 1996 and Insurance Regulations 1998. The law had set strict prudential guidelines to ensure that the nascent insurance industry was established on strong foundations.

This strictness manifests itself in rules that govern the operation of insurance firms: Insurance firms must meet paid-up share capital and solvency margin requirements and must hold certain percentage holdings of various investments.


The insurance business faces a number of challenges including failure by some firms to maintain minimum solvency margin which impedes their ability to meet their financial obligations. Other challenges include lack of training facilities for professionals within the country especially actuarial science and other related risk management studies.

The insurance industry at end of 2007 employed 2,530 staff, out of whom 982 (39 per cent) were working in insurance firms, while 1,548 (61 per cent) were engaged by insurance agencies, broking houses and loss assessors and adjusters.