Insurance Times Magazine February issue 2016

www.insurancetimestz.com

February 2016 ISSUE NO. 005

NEWS BUSINESS LIFESTYLE INDUSTRY

Business intelligence for the regional insurance market

Licensing made easy in Uganda Online portal to the rescue

Kenya’s NHIF outpatient scheme

There is room for improvement

Mutelle de Santé scheme Rwanda seeks 100pc health coverage

Unexploited potential laid bare 64pc of Tanzanians have never heard about insurance

Islamic finance is trending…

Opportunities are amazing

Tanzania Tsh5,000 | Uganda Ush7,500 | Kenya Ksh250 | Burundi BIF3,500 | Rwanda RWF1,700 | Zambia ZMK11,000 3

Insurance Times | Feb 2016

Official TIBA (Tanzania Insurance Brokers Association) Adopted Magazine

TAN-RE PROGRESSING AND GROWING IN AFRICA

ABOUT TAN-RE “Progressing and growing together in Africa: A summation of our expansion goals in Africa and the region.

It ref lects strongl y on the value we pl ace on the African continent and on the principles we uphold at TAN-RE, with focus on meeting and exceeding our client’s needs.”

Rajab S. Kakusa, CEO Tanzania Reinsurance Company (TAN-RE) is a regional reinsurance company providing a range of reinsurance products and services to clients in Africa, Middle East and Asia.

From its domicile in the historical port city of Dar es Salaam (‘Haven of Peace’) on the shores of the East African coast, TAN-RE effectively opened its doors for the writing of all classes of reinsurance business with effect from 27th January 2004.

TAN-RE underwrites all Life and Non-Life insurance business including Marine ,Aviation ,Political Violence, Terrorism and Sabotage.

TAN-RE has experienced year on year growth and now serves more than 180 companies in 46 countries across and I n Middle s u r a n East ce T i mAsia. es | Feb 2016 4Africa,

Current Core Activities TAN-RE’S Functions are summarized as follows:  Accepting local mandatory and commercial reinsurance business  Accepting inward reinsurance business  Training of industry insurance and reinsurance Personnel  Providing technical reinsurance assistance and related services  Providing an avenue for the investment of funds  Promoting business relations with other reinsurers  Compiling and maintaining market insurance and reinsurance statistics

Credit Rating TAN-RE has a credit rating of A+(Single A plus) for domestic Claims paying a ability and B+(Single B Plus) for international claims paying ability by Global Credit Rating Company of South Africa.

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Insurance Times | Feb 2016

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From The CEO’s Desk

Think research, think innovation!

Dear Readers, GREETINGS AND WELCOME to our 5th edition!

We at Insurance Times strongly believe in keeping the client at the heart of everything we do. We strive to be a partner of choice with all our stakeholders and are bent on building a regional magazine that reflects our core customer-centric values, which we constantly use in engaging with customers and with each other.

As you peruse the pages of our ITM, you will learn more about our different observations and recommendations for the industry, the intention being to maintain a keen insurance focus and background. The aim is to support the industry and create an environment that enables further the creation of multitude insurance products that are of relevance to changing patterns of our everyday lives.

ITM is produced and supported by a team of experienced professionals focused on enabling the industry come up with significant business opportunities essential to improving the overall regional business climate across East and Central Africa.

Moreover, we continually strive to create a high performance culture by ensuring continual industrial and stakeholder’s

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Insurance Times | Feb 2016

engagement to sustain development of the insurance industry.

It is our endeavour to provide our esteemed customers with a fulfilling menu of articles with which/of which/ where all areas of insurance issues are concerned.

It is our hope that you will enjoy traversing through our pages with us, and learn more about the industry. We value your feedback, too, and look forward to hearing from you.

ITM still sees the need for principal insurance companies as well as brokerage firms to invest more into research and development geared towards designing and inventing relevant products and solutions for their clients.

Comparatively, Banks have become very well versed with such issues, changing their organisation structures to support their clientele in terms of product innovation, marketing and communications, as well as corporate social responsibility.

It is clear that principal insurance companies are doing little, compared to banks, yet both types of institutions are in the financial sector. As a result, we are seeing an enormous increase of inclusion in banks, with insurance business forming part of their recent portfolio too.

However, the facts reveal that pension funds are taking up this role well, too. They have been striving hard to diversify their approach and aggressively embarking into insurance product offerings – especially medical and life insurance – to their members and non-members. These unique strategies that attract the masses (micro-insurance) have been adopted by organizations such as PSPF, NHIF, PPF, and LAPF. This is where the converted are headed. But genuinely, have we started to move??!

I believe this is an opportune time for insurance companies to invest more in R&D, innovation and product development, marketing and communication, as well as CSR. This will help them to reach the end-users – and therefore provide the companies with that opportunity to offer each segment of the public what best suits them. That way, insurance will largely contribute to the country’s financial inclusion and improve penetration and uptake of insurance products.

Sudi Marungu Simba

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C.E.O Sudi Marungu MANAGING DIRECTOR Fatma Abdulrazaq DIRECTOR Sallu Evarist PROJECT MANAGER Omary Aziz MANAGING EDITOR Mwirabi Sise CONSULTING EDITOR Isaac Mwangi CONTRIBUTORS Victor Babatunde, Anne Kiruku, Nelius Njagi, Elizabeth Wanjugu, Addah Zamm, Jovina Bujulu Graphic Designer Joe Ngari

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The Editor’s Note Dear Reader,

TECHNOLOGY HAS CONTINUALLY been making the life of man easier and more relaxed. For over a century, the pace of technological advancement has been remarkable and exceptional. In particular, the improvement of technology in the fields of printing, telephone communications, and the Internet have lessened physical barriers to communication and allowed people to interact freely on a global scale.

Technology has also led to immense changes in the transportation, manufacturing, engineering, and business sectors of economies around the world.

Advancement in technology in medicine and healthcare, too, has dramatically increased chances of surviving illness and disease, and enhanced our ability to survive organ failure and live remarkably well in event of the loss of a limb.

But as the world becomes more technologically progressive, threats and risks are growing in equal measure.

Inevitably, insurers have been involved in these technological developments over the years, providing security required by innovators and developers to put their ideas into practice. Without this security, these ideas might never have seen the light of day.

Going into 2016, technology will be a serious balancing act for insurers. On one hand, continuing development in technology will help spur economic activity, improve wellbeing and support longevity; on the other hand, there are likely to be risks attached to new technology, calling for careful assessment and management.

Since the insurance sector plays a key role in supporting economic growth and development internationally, it must be able to sufficiently provide medical and other health benefits despite the challenges of ageing and population growth. It must also provide adequate retirement incomes

Insurance Times | Feb 2016

and pay all sorts of claims to those who suffer specified losses. For insurers to successfully fulfill their duties and face new changes, they must be able to adapt to these developments.

It is obvious that insurance provides financial security to policy holders by dispersing the loss of the few over the fortunate many, so that the loss is borne lightly by the many, and consequently does not crush the few.

It therefore exists for two main reasons: To help prevent losses from happening in the first place and to alleviate the financial consequences if disaster does strike.

In addition, insurance galvanizes funds for savings and investment which would otherwise be tied up, removes fear, and establishes confidence for investors. The insurance industry has been known for its innovativeness and creativity. The industry’s past bears the marks of creativity and innovativeness, which has allowed it to continue providing a service that is central to the functioning of healthy economies globally.Having reached this stage, in 2016 the industry shall be required to muster all its creativity and innovativeness, because there are serious risks ahead due to social, economic and financial crises. As a sound and stable industry, it has a key part to play in building a secure and prosperous future through a scientific process that leads to a better environment for all.

Welcome 2016, a bright future beckons for the insurance sector.

Mwirabi Sise

MANAGING EDITOR

From the Nairobi Editorial Desk Why medical insurance must target changing needs THE BOTTOM LINE of all human endeavours is that they should strive to improve the quality of life. From technology to new farming methods, the aim is all the same – to find ways of doing things better and in an easier manner so as to improve the lives of people. Insurance is no exception.

This means that we must be constantly aware of changing trends and needs, so as to align our efforts with changing fortunes, challenges and circumstances.

One of the key areas that insurance deals with is healthcare. Without good health, a society becomes paralyzed: Children cannot go to school or workers to factories. Everything comes to a standstill. And that is why a lot of premium is given to ensuring that our environment is safe, that rivers are unpolluted, and that we avoid the use of dangerous pesticides in growing our crops.

Moreover, when we do fall sick, we want to get the best possible treatment. Quick diagnosis can save lives, as does the availability of the right drugs, proper surgical equipment, advanced radiological facilities, and a hospital environment that promotes healing for inpatients.

This is why medical insurance is so critical to a country. It is commendable that in East African countries, there are national health insurance schemes that take care of the needs of the public. Most of these are contributory, and their success stories vary from one country to the other.

In addition, there are numerous insurance firms which offer medical insurance in their packages. Most major companies take up insurance for their employees, with the coverage tied to levels of financial support attached to these schemes.

In essence, this becomes a sort of double taxation, in that an employee is compelled by law to pay for a national health insurance scheme with the state provider, and still takes up medical insurance with a private com-

pany. What it shows, then, is that the national providers are not fully meeting the needs of their customers.

Of course, public hospitals are also poorly equipped, and the cost of treatment in private hospitals is often way above what the state medical insurer is willing to pay.

But there is also another problem. Beyond creating blanket policies, insurance companies must be alive to changing health insurance needs. There was a time, for instance, when HIV/Aids ailments were not covered, and even employers discriminated against HIV-positive persons. That was partly to avoid incurring huge medical bills. With time, of course, that irrational reaction has largely been overcome.

Today, however, this irrationality lives on in other ways. Why, for instance, should there be discrimination against pregnancy and childbirth by many providers, putting women at a distinct disadvantage? As a society, we ought to appreciate and assist the process by which human beings procreate and perpetuate their own existence.

There is an explosion of various types of cancer, too.

Why are we not seeing special efforts and emphasis to assist these patients? Of course, the whole society is to be blamed for this explosion: Through allowing dumping of toxic products in the region, failing to come out strongly against tobacco consumption, reckless use of chemicals on animals and plants, and so on.

We will need a multi-pronged effort to fight the emerging trends, and insurance has a strong role to play in curbing diseases. This time round, hopefully it won’t be long before we see more targeted insurance covers.

Isaac Mwangi is a communications lecturer and consultant based in Nairobi, and is consulting editor for Insurance Times. E-mail: isaacmwangi@minachariots.com

Insurance Times | Feb 2016

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Dear Readers,

Have you seen the cost of insurance??

We value your ideas and welcome any contributions that can enrich public debate on the many issues of interest to our readers. We invite you to send your views, letters, and other contributions for possible publication. The Editor reserves the right to publish or not to do so.

Articles may also be edited for clarity and brevity.

Please send your contributions to: The Editor Insurance Times Magazine P.O. Box 14310 Dar es Salaam, Tanzania E-mail: editorial@insurancetimesmagazine.com

Letters Congrats for great magazine

Can insurance firms, too, raid the banking sector?

lease allow me to extend my kudos to you and your team for putting together a great magazine.

I must say I have enjoyed reading the interesting and informative articles in the magazine over the festive period, and I feel enlightened to learn of the disputes and resolution thereof between Britam and Acorn.

This was covered in your fourth issue as the cover story.

I also liked the “Waking Giant” piece and the visual breakdown of the wide range of insurance policies that NIC offers, among many other articles. I fell especially proud to learn that an East African country, Tanzania, has three of Africa’s seven wonders.

The well-researched pieces make this a truly one-stop shop for all things insurance in East Africa, and surprisingly much more.

I would like to suggest that you initiate a page where you can post opportunities in the industry and related areas across the region. I am sure the industry is close knit, with companies and individuals being all members of organizations such as TIBA, and AIB. Through the magazine, arising opportunities can be effectively communicated to those, like me, looking to join the industry.

I can’t wait for my copy of the next issue.

he past couple of issues of Insurance Times Magazine have carried articles on how banks are delving into insurance business. I have read with interest the articles touching on what has come to be known as bancassurance, and it all seems very confusing.

Has banking really become so unprofitable that instead of concentrating on their core business, banks are stepping out into other sectors? I can understand when public transport vehicles double up as parcel couriers, but for a serious and profitable business like banking to move into unrelated areas is not quite expected.

Again, this seems to be a one-way affair. At this rate, we shall soon have no insurance firms left, or they shall all become subsidiaries of banks. That could be dangerous and counterproductive, because banks generally love to make super profits over short durations and may therefore drive the insurance business in a direction that is against the public interest.

While still at it, why can’t insurance firms also get into the banking business? Tit for tat is a fair game: If banks are being allowed to raid other sectors, they shouldn’t complain if insurance firms or bus companies decide to open banking halls as well.

It would be interesting to know what the experts have to say about this whole bancassurance business, hopefully in the coming issues of your esteemed magazine.

P

Joe Ngari Nairobi 10

Insurance Times | Feb 2016

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Issa Ingwam Arusha

Contents

MAGAZINE 16 An outpatient scheme, at last!

Kenya’s NHIF rolls out outpatient scheme, but not everyone is happy

24 Online portal Regulator goes digital, easing the licensing process for Ugandan insurance agents

26 Unexploited potential »» p.12

FinScope survey says 64pc of Tanzanians have never heard about insurance

42 Islamic finance From Islamic insurance to microfinance, there are opportunities galore that accord with Islamic principles

46 Rwanda’s health campaign seeks 100pc health coverage National health scheme Mutelle de Santé aims for 100 per cent health insurance in massive campaign »» p.63

52 No customers, no business Why developing a customer culture should be the number one strategic priority of any CEO and the whole company

78 Dr. Saqware’s Ideas Despite huge cost to the economy, compensation for third parties remains a challenge in Tanzania

»» p.74

»» p.82

Insurance Times | Feb 2016

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Insurance

TIBA pact with IFM gives Brokers a voice in training of future IFM graduates

TIBA President Mohammed Jaffer (right) and IFM Rector Prof. Godwin Mjema sign a Memorandum of Understanding between the two organizations.

By Staff Writer

A

Memorandum of Understanding (MoU) signed between the Tanzania Insurance Brokers Association (TIBA) and the Institute of Finance Management (IFM) aims at cementing joint cooperation in academic development between the two organizations.

The agreement was signed during the Annual Brokers’ Day at Hyatt Regency on the 16 October 2015. Commissioner of Insurance Israel Kamuzora was the guest of honour at that occasion.

The President of TIBA, Mohammed Jaffer, lauded IFM for its remarkable contribution in the history of insurance in Tanzania, saying it had for a long time

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been associated with efforts to ensure the growth and success of the insurance industry. TIBA, he said, had now joined ranks in support of this noble cause.

In the same event, IFM Rector Prof.

Godwin Mjema said it was the only one that provides undergraduate and postgraduate degrees on insurance and risk management in Tanzania. The signing of the MoU between the two organizations, therefore, will benefit the industry and provide a new avenue for IFM students to gain training while pursuing their courses.

This will in turn guarantee the sustainable growth of a knowledgeable workforce.

Prof Mjema underlined the importance of cooperation between the industry and academia so as to exploit opportunities

Insurance Times | Feb 2016

through research and development. This will guarantee the growth of business as well as add to workers’ expertize by making it possible for them to share experiences and maximize their objectives.

He further said that joint research and development were key issues in creating “hybrid” degree programmes that reflected the needs of the industry.

Among the areas which were agreed upon between TIBA and IFM were the preparation of training programmes for short courses and the full involvement of TIBA in IFM curriculum development.

The MoU aims at identifying areas that require a new curriculum set-up so as to address emerging industries, particularly in the oil and gas industry as well as

From left: AIBK vice chairman Nelson Omolo, BBA President Abdul Salum, TIBA President Mohammed Jaffer, EAIBA Chairman Latimer Mukasa, and Rwanda Brokers Association Chairman Jean Piere.

risks due to the effects of climatic changes. Such areas call for immediate transformation of the academic curriculum, which will now involve the academia as well as practitioners.

The MoU stipulates that the areas of collaboration will include sponsorships and awards to the best students, and also supporting IFM in the preparation of its career day celebration.

During the celebration, TIBA unveiled the association’s achievements, which reflect a remarkable growth resulting from its brokers spread countrywide. Now numbering 120, they have generated a total premium of over Tsh350 billion transacted to date.

The report by TIBA revealed that Tanzania is a broker-driven market, with brokers having over 60 per cent share for both general business and medical insurance. The remaining market share, for life insurance, is dominated by agents. However, brokers control a fair share of that market too.

With the current positive macroeconomic developments in the country, broker penetration is projected to grow steadily in the coming year and beyond.

The future of TIBA therefore looks bright

and promising.

The report showed that the balance of the business under general and medical insurance is either on a direct basis or through agents. This compares well with the performance of the industry in the region.

The insurance industry contributes about 1 per cent of GDP, but Tanzania Insurance Regulatory Authority estimates show that this could grow to 2 per cent by the year 2019.

The theme of the Brokers Day was, “Realign, Refocus and Reap.” Kamuzora highlighted issues that need to be addressed in line with this theme.

These issues include exposing brokers to what is happening beyond the borders of Tanzania, best practice, ICT literacy, and training and examination of principal officers at three-year intervals.

Brokers were reminded not to rely on cheap insurance, but to give proper underwriting consideration and to always get the best for the customer. They were also asked to support and strengthen TIBA. The Commissioner further informed the brokers that they were now required to get clearance letters from the association before they could be licensed by the

regulator.

Issues related to research, specialization and licensing of more insurance distribution channels were also discussed.

Jaffer said TIBA was committed to the development of the industry through investment in human capital and corporate social responsibility.

The objective of the annual event is to reflect on industry progress as well as the challenges experienced. It also seeks measures to improve the insurance industry’s performance.

This is why the industry established a day when all stakeholders could meet and discuss issues and challenges affecting brokers, and to attempt collective solutions.

The Tanzania Insurance Brokers Association (TIBA) is an institutional body corporate brought into being through the Insurance Act Number 10 of 2009. It is run by an elected Governing Council and headed by a president. There is a Constitution and Code of Conduct in place to guide the Council. It is a central organization for insurance brokers to advance and protect their interests. It also encourages the training and education of persons practising or intending to practice insurance in Tanzania.

The success of the brokers annual event has prompted TIBA to start planning for the next annual event that will take place during the third quarter of 2016.

This was the first annual brokers day.

It was held in Dar es Salaam and brought together nearly 200 stakeholders from the Tanzanian insurance industry.

Insurance Times | Feb 2016

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Insurance

To get the best policy, everybody needs a broker Mohammed Jaffer is President of the Tanzania Insurance Brokers Association (TIBA). He spoke to our staff writer.

ITM: What is your background in the Insurance industry?

JAFFER: My career started in 2002 at the age of 20, when I returned from the United Arab Emirates after completing my Bachelor of Science degree in Management at The National American University.

From 2002 to 2010, I worked with Jubilee Insurance Tanzania, starting off as a management trainee and rising all the way to become the regional manager for the North Region of Tanzania.

In 2010, I was appointed vice president of MaxInsure Tanzania and was part of the team that started the company from scratch. I stayed there until 2013, when I felt that I had enough experience to go into insurance broking and consultancy.

Currently, besides my formal title at TIBA, I am a senior partner with the TM Group of Companies, which has under it our Broking firm, among other subsidiaries.

ITM: Your professional career extends beyond just the financial sector, and you also have a number of other accolades to your name. What are the highlights of these?

JAFFER: With the support of those around me, I have been fortunate to have been recognized and awarded for my accomplishments on a number of occasions.

Most recently, in 2015 I was appointed vice president of the East African Insurance Brokers Association (EAIBA). In the same year, I was elected the president of TIBA. I have won the Tanzania Annual Young Professionals Award, my company won the 8th top mid-sized company in

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Tanzania at the KPMG Awards, and I was inducted into the Hall of Fame as one of the Youngest Achievers of the Year at the Tanzania Excellence Awards. I am also a member of the Rotary Club and was the youngest president of the Club in East Africa at the age of 25 years.

ITM: Tell us about TIBA. Why would this perhaps be the first time that some readers are hearing of an association that has been responsible for business worth Tsh350 billion ($166 million)?

JAFFER: The background details of TIBA can be obtained from our website, www.tiba.co.tz; therefore, I will elaborate more on what it represents and how it operates.

TIBA is run by an elected Governing Council headed by a president. There is a constitution and a code of conduct, which guide the Council. TIBA is the central organization for insurance brokers to advance and protect their interests, and it not only encourages but also holds training sessions for any person(s) practising or intending to practise in the Insurance industry.

I T M : What is T I B A’s

Insurance Times | Feb 2016

contribution to the insurance industry?

JAFFER: The detailed background of the insurance industry in Tanzania can be obtained from the regulator’s website, www.tira.go.tz; however, in brief, the market was nationalized during the 1960s and then liberalized and opened to outside investors in 1997. Today, we have over 30 general insurers, six medical insurers and four life insurers in Tanzania. In comparison, we have over 120 brokers, 60 loss assessors and adjusters, and over 500 agents operating in the country.

The insurance industry in Tanzania operates through a number of distribution channels; however, the most common are direct insurance, use of intermediaries, and through agents.

The total market was worth approximately Tsh580 billion ($276 million) in 2014, out of which brokers contribute approximately 60 per cent, hence the tagline of being a Tsh350 billion ($166 million) association.

ITM: If a customer can buy insurance directly from an insurance company, why use the services of a broker?

JAFFER: The same question is always raised the world over. However, in almost every market, insurance brokers place over 50 per cent of the policies to the underwriters.

The reason for clients entrusting brokers with their needs is very simple. An insurance broker is a full time specialist insurance practitioner whose role is to serve the client; he/ she does this by acquiring data and raw information from the client about their risk exposures and refines the data into an insurable and transferable risk.

The broker then seeks an underwriter who has the expertise and financial capacity to handle that particular risk. This avoids all the running around and expense of time and money by the cli-

ent. The broker works with a number of companies and can offer advice, based on his own assessment, of which underwriter has the capacity for a particular risk.

This is just the tip of the iceberg, as this is purely retail broking. It would get even more complex if international reinsurers were to be contacted for highly specialized risks for which there may not be any local capacity. This is called reinsurance broking.

In all these cases and because of the levels of professionalism expected from brokers, there are statutory requirements to be fulfilled. Every broker has a professional indemnity cover in place that protects the client in case of financial prejudice arising from professional negligence.

In its simplest form, it’s all about the division of labour and specialization. Let the broker handle all your insurance needs and as an insured, you can concentrate on your core business. As brokers, we are specialists in insurance transactions and our fees are actually structured through our underwriters and not charged on clients.

ITM: What relationship does TIBA have with the regulator and other associations in the insurance industry?

JAFFER: TIBA holds regular meetings with the regulator and invites all other associations for TIBA Council meetings.

TIBA believes that the prosperity of the entire insurance industry requires all stakeholders of the industry to work together for a common goal.

All associations play a complementary role to one another – and this without doubt ensures macroeconomic growth of the economy of Tanzania.

ITM: Stories are told of insurance brokers who do not remit premiums to the insurance companies. How does TIBA protect the unsuspecting customer?

JAFFER: It is wrong, both ethically and legally, for an intermediary to misuse trust funds. All brokers are required by law to have a trust account and a separate expense account. As soon as a premium is received by the broker, it has to be deposited into the Trust Account. On maturity, the money has to be immediately remitted to the insurance company. This is the first form of security.

The second form is aided through our regulator, who carries out spot checks.

The key issues they look at include in-

spection of the bank accounts of brokers.

This is aimed at ensuring that there is no misuse of client funds.

Thirdly, all brokers are required to submit quarterly reports – which could even be revised to monthly reports – to the regulator. The purpose of all these checks is to ensure that the public is protected.

However, there are times that bad apples may breach these provisions. If such an act is reported and confirmed through inspection, then the penalties range from not only financial fines, but also cancellation of licence and being barred from representing a brokerage firm or practicing insurance for the principal officer.

ITM: In the event of a dispute between a client and an underwriter, how does TIBA help the client?

JAFFER: Unlike other markets, the underwriters in Tanzania are very understanding and flexible in dealing with the insuring public. There are very rare occasions when a dispute on a legitimate claim actually arises. However, disputes are inevitable in business transactions, and the insurance industry is no exception.

If a broker and his client approach TIBA for advice, the association investigates the cause of the dispute and works in accordance with the arbitration clause under the policy to allow parties to sit across the table and seek an amicable solution. This is done at no cost to the client; however, this is only done once approved by the Technical Council after their investigations on the legitimacy of the claim based on the policy wording.

A very interesting recent development in Tanzania is the appointment of an Ombudsman in Insurance, whose role will include conflict resolution between opposing sides in an insurance contract.

ITM: There is a negative perception that some Insurers take their time before settling claims. In inflationary periods, the client becomes the loser. How can brokers and TIBA assist the insuring public?

JAFFER: It is true that some claims take longer to settle than others. However, once documentation is completed and a discharge voucher is signed, the Insurance Act clearly specifies that payment has to be made within 45 days. This is information that brokers have, and we ask the public to go through brokers so that their interests can be protected.

A prudent broker protects his Contd on page 14 >>

Insurance Times | Feb 2016

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Insurance

TIBA council members’ comments >>From page 13

Mendies Mhiribidi - Council Member

clients through service level agreements with his underwriters. Through these agreements, they place obligations and duties to both brokers and underwriters to deliver within certain parameters. The agreements can also be used as a yardstick by the client in deciding whether to renew a policy with that particular broker or underwriter.

ITM: With all these advantages of insuring through brokers, why is it that only 60 per cent of the insurance business in Tanzania is done through brokers?

JAFFER: Ideally, higher levels of penetration are desired. As TIBA, we have created generic awareness campaigns to educate the insuring public about the role of brokers, the value addition they bring and, more importantly, to eliminate fears that it costs more if one goes through a broker.

We also have an outreach programme, where we are using the media to communicate the benefits of taking out insurance, especially though brokers.

Having said this, some clients would not prefer using a broker – perhaps for connectional reasons.

My message to the insuring public is that they should ensure that they have insurance covers in place – be it educational, life or general insurance – and be protected financially. It is more expensive not to insure.

Above all, let them use the medium of an insurance broker to advise them on all their insurance matters.

ITM: From your vantage point as vice president of EAIBA, how does the insurance industry in Tanzania compare to the rest of the region?

JAFFER: One of the key indicators to compare ourselves to the region is to look at the penetration levels. Since Rwanda and Burundi are very young markets, our comparisons should be done more with Kenya and Uganda.

As a contributor to the GDP, Kenya leads at 3.25 per cent, Tanzania at 0.7 per cent, and Uganda at 0.65 per cent. Broker penetration levels in Kenya are closer to 70 per cent, Tanzania is at 60 per cent and Uganda at 55 per cent.

As an industry, we need to work harder to increase our relevance to the economy for the betterment of our people.

I wish the entire insuring public a safe and prosperous 2016, and encourage them to insure through a broker.

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Insurance Times | Feb 2016

Principal Officer - Eagle Africa Insurance brokers In 2016, we need to focus on increasing the market share of brokers to over 65 per cent by getting out information to the public. People need to know that insurance brokers are trained insurance experts who help their clients to manage their unforeseen insurable risks through proper risk identification and transfer to insurance companies. In a nutshell, brokers act as insurance departments for their respective clients, handling all their insurance needs without charging any costs to the client.

In 2015, we managed to build on the trust of the industry. Now, we need to expand our reach to the public, while engaging the Commissioner’s Office and the Insurance Institute to promote the role of the broker and counter negative public perceptions about brokers. We also need to make sure that brokers are actually professionals: Everyone called a broker could, like in some countries, be registered with the institute, have a certificate of practice, and so on. These requirements will enable the industry to monitor the activities of individual practitioners and ensure that we maintain high professional and ethical standards, as pointed out by former TIBA President Typhon Rutazambwa.

Khamis Suleiman General Manager Aon Tanzania Ltd Secretary of TIBA It is going to be challenging to the industry. The government spending spree is coming to an end, and this will squeeze the money supply for sure. The insuring community will be looking for where to cut costs, and insurance has always been the first victim. As a rule, falsified and inflated claims will increase when there is a shortage of money. The public will try to find a soft option, and insurance has been a soft option.

As an industry, we have to work together to seal loopholes. Brokers, insurers, reinsurers and assessors all need to sit together and plan against these likely fraudulent transactions.

Dominic Osumo - Council Member Executive Director and Group CEO – ARIS I have no doubt about the potential for the growth of our industry this year. However, I see a number of challenges ahead that will test our capacity to respond. As brokers, the greatest challenge is the increasing interest in insurance by banks in the form of bancassurance. There is a convergence of mutual interests of insurers and bankers. Insurers think that brokers complicate business and are moving towards direct sources for business, while banks see an opportunity for additional income.

In addition, the development yields a major threat even as it consolidates several advantages to clients – including convenience, benefits of economies of scale, and tacit coercion linked to loan products. Some of the banks are purportedly offering free insurance.

The rise and fall of NOKIA is widely documented and the following statements from its former CEO offer lessons we need to heed, lest we find broking business wiped out one day: “We didn’t do anything wrong, but somehow, we lost… We knew what was happening, but our mistake was in not being able to turn that into action… Necessary but painful decisions hadn’t been made, which meant that we had to do them later, when they were difficult and expensive.”

Enough said!

Claude Mukanganwa Principal Officer – BTB Insurance Brokers Regional Integration and the opening of the business space have created more opportunities for Tanzania’s insurance industry. The bar has been raised: We have to go over the bar, not under it, and compete with some of the best brands and entrepreneurs in the region. For this to happen, we need strong associations to guide and give advice to their membership.

TIBA, being a member of EAIBA, will work with other regional associations for the benefit of our members. The future of TIBA and the Tanzania insurance industry looks bright.

Tanzania Insurance Brokers Association Who Are Insurance Brokers?

CHOICE Brokers work with all Underwriters in the country.

They assist to reach the most competitive prices and the most suitable covers for you

ADVICE Brokers brings their experience to their role as your personal Insurance Advisor

TRANSPARENCY Using a Broker’s services does not cost you anything extra.

Their remunerations are handled by their Underwritters.

P.O BOX 77042 DAR ES SALAAM TANZANIA PHONE: +255 659 149 977 LOCATION: MAKTABA COMPLEX BIBI TITI ROAD DAR ES SALAAM Insurance website; http//:www.tiba.co.tz

Times | Feb 2016

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Insurance

Kenyan workers get outpatient cover as NHIF rolls out new scheme

The amount that NHIF is limiting to private hospitals cannot sustain the programme.”

By Anne Kiruku

E

fforts to attain universal health care in Kenya have received a major boost after the National Health Insurance Fund (NHIF) rolled out a long-awaited scheme that will see more than 6 million Kenyans qualify for outpatient services in public hospitals as well as some private health facilities.

The cover, which has been rejected by major private hospitals, has been long awaited after the government raised the levels of compulsory contributions to NHIF so as to cater for the new outpatient scheme. NHIF has been covering only part or whole of the bed charges on admission, depending with the hospital.

From last April, the government increased the amount paid to NHIF to Ksh2,000 ($20) for those earning more than Ksh100,000 ($100) and Ksh150 ($1.5) for those earning Ksh6,000 ($60) and below. The self-employed and volunteers will contribute Ksh500

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Insurance Times | Feb 2016

Ouma Oluga, KMPPDU Secretary General ($5) and Ksh300 ($3), respectively, under the scheme.

The insurance fund is open to all Kenyans above 18 years who earn more than Ksh1,000 ($10) per month.

The move to raise monthly contributions was marred with controversy, forcing workers’ unions to move to the corridors of justice to oppose the move.

The Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers (Kudheiha) moved to court in 2012 challenging implementation of the new rates, saying, the NHIF board, the then Medical Services Minister Prof Anyang’ Nyong’o and Labour Minister John Munyes intended to enforce the enhanced rates without consultations.

The Central Organisation Trade Unions (COTU) and the Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPPDU) also raised questions regarding the capacity of NHIF to handle such a large

scheme as it moves away from just offering inpatient cover to outpatient cover as well.

The NHIF outpatient scheme has been branded ineffective due to the myriad challenges it has encountered so far. The inability of the scheme to provide medical cover in certain private and mission hospitals, which rejected it citing the low monthly fees per person that the scheme was to pay them, has been a major setback for the otherwise comprehensive medical cover.

NHIF clients are also dissatisfied, saying the hospitals they have to choose from for the outpatient services do not meet their expectations. One such client, Mrs Teresia Ng’ang’a, said that the private hospitals under the NHIF outpatient scheme were just “roadside kiosks” that lacked the facilities to handle even common ailments. “Most of the private hospitals under the NHIF outpatient cover are only fit for treating colds and flus.”

The Secretary General of KMPPDU, Ouma Oluga, agreed that private hospitals could not sign in with NHIF as the capitation was very low. “The amount that NHIF is limiting to private hospitals cannot sustain the programme.”

The failure of NHIF to offer reliable services has ensured that health insurance uptake remains low in the country. According to 2013 demographic survey, health insurance uptake in the country was very low especially in Nairobi where only 32 per cent despite it being the highly populated county. This Mr Oluga attributes to a high number of working poor. The low medical insurance uptake has not improved from 2013, says Mr Oluga.

“Health insurance is also a foreign concept and many people are apprehensive of taking up an insurance policy due to religious beliefs – believing that God will take care of them. This has greatly affected signing with insurance companies for cover,” said Oluga.

To ensure Kenyans sign in with the NHIF scheme and avoid situations where the client applies for a card after falling sick, the insurance provider has made it a condition that the card can only mature and be ready for use two months after application.

This, says NHIF Chief Executive Officer Simeon ole Kirgotty, will ensure the medical uptake in Kenya increases.

“We want to ensure Kenyans plan for cover and don’t apply for it as a case of emergency.”

Why mission and private hospitals are rejecting the new NHIF cover

NHIF chief executive, Simeon ole Kirgotty. (right)

By Anne Kiruku

T

he recently rolled NHIF outpatient cover has faced its share of challenges, mostly emanating from private hospitals and workers unions – two critical groups whose support is necessary for the scheme to run smoothly.

When major private hospitals in rejected the arrangement, that left contributors with only one option – getting services from already poorly-equipped and understaffed public hospitals. This has caused a lot of anxiety among clients, who feel short-changed now that the mandatory fees were drastically increased from July last year.

NHIF was to pay Ksh 100 ($1) per person monthly, translating to Ksh 1,200 ($12) per year, which the hospitals said was too little. The hospitals, under the auspices of the Kenya National Association of Private Hospitals (KAPH), demanded that the government increase this amount to Ksh6,000 ($60) per year.

The hospitals further demanded that the government introduce a separate co-pay fee of Ksh200 ($2)per person, to be paid by patients visiting private hospitals accredited to NHIF. Doctors from private hospitals feel the outpatient cover launched by the National Hospital Insurance Fund and the scaling up of the fund’s premiums for high income earners will still leave out millions of poor Kenyans without access to affordable medical services.

In a press statement, managers of 19 accredited private hospitals in

the Coast region, speaking under the auspices of KAPH, said the amount the government was offering was unrealistic. “It is neither practical nor sustainable,” said KAPH Coast region chairman Wallace Njeng’a.

He asked the government to raise the figure to Ksh500 ($5) per person per month, in addition to the introduction of a co-pay fee for each visit to a hospital by patients.

“Where does one undergo X-rays, dialysis and consultation at Kh100 ($1) per month?” asked Njiiri Muracia of Pwani Medical Centre. Dr Muracia said the introduction of a co-pay fee would also help in weeding out contributors who may want to abuse the scheme “We will not sign up if nothing changes,” KAPH chairman John Nyaumah has said.

Dr Nyaumah said that the low rates limit patients to minor healthcare problems and locks them out of diagnostic services that are available in the better equipped private facilities.

NHIF chief executive, Simeon ole Kirgotty, has justified the outpatient covers, saying that the capping in capitation was based on studies that established how often Kenyans sought medical care.

“Hospitals will continue getting the cash they are entitled to based on the number of contributors who have registered with them, regardless of whether services are sought or not,” said Mr Kirgotty.

Insurance Times | Feb 2016

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Insurance

Tanzania: Sanlam gets ready to widen product range

By Staff Writer

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T

Sanlam General Insurance Chief Executive Officer Manasseh Kawoloka

anzanians will soon have greater access to a range of innovative insurance products to cover various risks of a personal and commercial nature, thanks to the recent rebranding of NIKO Insurance.

The rebranding of NIKO to South African-based insurer Sanlam General Insurance, which has a track record of 10 years in Tanzania’s insurance market, follows the earlier rebranding of African Life Assurance to Sanlam Life Insurance some three months ago.

“The rebranding will provide an opportunity to enhance the existing benefits of being

Insurance Times | Feb 2016

a client and give them access to the larger group’s financial strength, technical expertise and brand equity,” Sanlam General Insurance Chief Executive Officer Manasseh Kawoloka said in Dar es Salaam.

He added that the rebranding will also enable the company to offer more innovative and accessible products to additional segments of the population. According to the Tanzania Insurance Regulatory Authority (TIRA), the insurance industry grew at an average rate of 18 per cent in the past five years, but the services are mainly concentrated in urban centres.

The strong performance notwithstanding, the sector’s penetration rate as measured by the ratio of premiums underwritten to GDP remains low. The insurance penetration rate is estimated at one per cent, which gives the sector a large growth potential that can be harnessed if there is commitment in increasing financial and insurance literacy and creating a greater awareness on the importance of insurance in the society. The ideal situation is that growth in insurance coverage should not lag too far behind economic growth.

In 2014, the country registered GDP growth of about seven per cent, implying that incomes are rising. This means that individuals and corporates should be increasingly seeking insurance to protect their expanding wealth or income base. The growth and penetration of the insurance sector should have subsequently mirrored the expansion of the GDP. The wide lag between GDP growth and insurance reach means that there are vast opportunities for growth of exposures and income in the insurance sector. Similarly, awareness levels and the reach of insurance to the less privileged will need to be addressed.

The majority of insurance products in Tanzania are focused on traditional markets, serving the needs of large corporates and high income individuals, with limited product development at the lower income end of the population.

While corporates are an important business segment in growing revenues, the rising population in Tanzania requiring life, health and other general insurance products provides additional opportunities for growth of the industry. \ Contd on page 20 >>

Insurance Times | Feb 2016

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Insurance

Jubilee set to swallow 3 firms as M&A spree gets into top gear

By Staff Writer

J

ubilee Insurance is taking the competition head-on as another round of mergers and acquisitions in Kenya unfolds.

Increased interest by foreign firms is also being witnessed as firms struggle to attain the minimum running capital as dictated by the new Insurance Regulatory Authority (IRA) regulations.

Jubilee is in the process of acquiring three insurance firms, according to the company’s Chief Executive Officer Patrick Tumbo. “We have the financial muscle to acquire as many insurance firms as possible, but right now we are in talks with three insurance firms

– one international and another two local.”

Tumbo was speaking to journalists during the signing of a partnership agreement between the insurance firm and CMC Motors. He said discussions on the acquisitions were ongoing.

Mergers and acquisitions in the past two years have included Old Mutual’s acquisition of a majority stake in UAP Insurance, and the purchase by Pan Africa Insurance of Gateway Insurance.

Foreign companies and investment groups have also penetrated the local market over this period through buyups or acquisition of stakes in Kenyan firms. Saham Insurance, Metropoli-

tan International Holdings, Prudential PLC, Pan Africa Insurance Holdings and LeapFrog II Holdings have all either acquired or bought insurance firms in Kenya in the recent past.

The recent interest in the insurance sector in Kenya by international companies is attributed to the growing middle class as well as the discovery of oil and gas. IRA also attributes the rising insurance penetration to aggressive marketing and growing confidence in the sector by the local population.

Although Tumbo did not reveal the names of the firms the company is in talks with due to non-disclosure agreements, he said that Jubilee would be expanding into more African countries.

The insurer already has operations in Kenya, Uganda, Tanzania and Burundi, and recently started operations in the DR Congo. The firm is set to roll out its products in Madagascar by next year. It is also said to be eyeing the Ethiopian market.

>>From page 13 Regarding the low level of insurance penetration, Kawoloka said, “We see this as a huge opportunity to provide customers with greater access to our products to meet their general insurance needs.”

Kawoloka said Sanlam will continue to offer a full range of general insurance products for both personal and corporate clients.

The products offered include a range of business and personal products like motor, fire, marine, engineering as well as additional specialized insurance cover options.

NIKO Insurance Tanzania Ltd was launched in 2005 following the acquisition of about 67 per cent shareholding of Imperial Insurance Company Limited.

It operates as part of NICO Holdings Ltd, a multinational group whose main business is insurance and banking, thereby combining operations with a series of synergistic networking partnerships while maintaining a strong customer focus.

With a track record of 97 years, Sanlam Group is a diversified financial ser22

vices business with assets of more than $60 billion and an international footprint.

Sanlam, a South Africa-based multinational financial services group, owns a 46 per cent stake in NIKO through its subsidiary company, Sanlam Emerging Markets (SEM).

The SEM business cluster is responsible for Sanlam’s financial business services in emerging markets outside South Africa, and aims to ensure sustainable delivery and growth across the various businesses that make up this cluster. Sanlam Emerging Markets (SEM) is responsible for Sanlam’s financial business services (life assurance, general insurance, banking, credit, health, bancassurance and asset management) in emerging markets outside South Africa.

Its objective is to ensure sustainable delivery and growth across the various businesses that make up this cluster. SEM has businesses in Tanzania, Botswana, Namibia, Malawi, Kenya, Rwanda, Zambia, Ghana, Nigeria, Uganda, Mozambique, India and Malaysia. It has an indi-

Insurance Times | Feb 2016

rect presence via associate companies in the Gambia, Burundi, Lesotho, Swaziland and the Philippines.

The Corporate Development Executive at Sanlam Emerging Markets, Thabied Majal, said that through the Sanlam brand, clients will have the added comfort and security of doing business with a company that is well known as a leader in both short and long term insurance in many African markets.

“We are looking forward to using the opportunity to strengthen business relationships with our clients, partners and associates and to further entrench the Sanlam way of doing business to a wider range of clients,” Majal said.

He said Sanlam offers expertise and experience to its partners as well as world class products and services that create sustainable value. The geographical diversification strategy focuses on investing in small, bolt-on deals and partnerships with established businesses in emerging markets as well as the firms’ most valuable assets.

Insurance Times | Feb 2016

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Insurance

Intrigues and opportunities galore in Old Mutual-UAP merger

Anne Kiruku

H

aving concluded their merger a few months ago, it remains to be seen how fast the new UAP-Old Mutual Group will move in the new year in its bid to gain listing on the Nairobi Securities Exchange (NSE).

Listing at the NSE will make it easier to trade the firm’s shares and help in discovery of better prices. After the listing, it will take six months for the firm to start trading on the NSE, according to analysts. The listing will make the new entity the seventh insurance company on the bourse.

UAP Chairman Joe Wanjui is optimistic that the merger will improve the performance of the businesses. “The combined UAP and Old Mutual businesses in Kenya will be enhanced to include insurance, investment management, properties, banking and securities brokerage, thus creating a strong operating platform to continue growing the business,” said Wanjui.

Wanjui said that the merger offers

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Insurance Times | Feb 2016

UAP Chairman Joe Wanjui is optimistic that the merger will improve the performance of the businesses. clients an enhanced range of professional and improved quality services. This serves to improve the quality of financial services and boost insurance penetration, which is said to be on the decline in East Africa.

Before the merger, Old Mutual had a small business in Kenya offering insurance, investments and financial planning services, while UAP was the third-largest general insurer in Kenya and second-largest health insurance business, with a substantial property investment portfolio and a fast-growing life insurance business. UAP also has operations in Uganda, where it is the second-largest general and health insurance business. It also operates in South Sudan, Rwanda, Tanzania and the Democratic Republic of Congo.

Old Mutual had obtained regulatory approvals to buy out some private equity firms, raising its shareholding to 60.66 per cent from 23.3 per cent before the merger. The South African and London-listed

insurer insurance company bought a combined 37.3 per cent from PE firms Aureos, Africinvest and Swedfund for around Ksh14 billion ($135.9 million). “This raised the firm’s position in the Kenyan life insurance business from number eight to four,” said Ralph Mupita, Old Mutual’s emerging markets chief executive officer.

“We will not run two businesses, we will run one integrated business,” an optimistic Mr Mupita said.

Old Mutual first bought into UAP in January by acquiring a combined 23.3 per cent stake from Centum Investment. The 2014 Annual Reports indicate that as at the end of last year, UAP had 995 shareholders, with most of the firm’s stocks held by a few individuals.

The two companies promised no jobs would be lost, but questions were being raised on whom between the CEOs of UAP and Old Mutual would be picked to head the new entity. But eventually, Peter Mwangi, Old Mutual CEO and former NSE boss, was picked to head the merged group. In a swift turn of events, Dominic Kiarie, who was the CEO of UAP, was edged out and forced to resign.

Kiarie, who seven years ago was headhunted by Old Mutual from British American Asset Managers, had pulled a fast one by going back to his previous position at BAAM after a few days at Old Mutual. He was forced to resign after the move returned to haunt him following the UAP-Old Mutual merger. Three years after returning to BAAM, Kiarie moved to UAP as Deputy CEO and rose to become the boss.

With the company he snubbed seven years ago having now acquired the one he was heading, he simply had to go.

Life, health policies now exempted from VAT Act

By Staff Writer

T

he new Value Added Tax Act 2014 came with changes that will bring a positive impact on the growth of life and health insurance in the country.

In the previous law,VAT was charged on all insurance – both life and non-life insurance – making some stakeholders call for amendments to exempt life insurance.

According to the new Act, exemption on insurance is limited to life and health insurance, while other forms will remain subject to VAT. The Tanzania Revenue Authority (TRA) says both life and health assurance are basic to human beings, and that is why it was important to give relief so that a majority of the people can have access to the service at a low cost.

Statistically, the Tanzania insurance market is still immature and has grown by only 17 per cent in gross premiums over the past two years compared to the previous year’s performance. The market growth was consistent with the growth of national nominal GDP and the financial intermediation sector nominal GDP during the year under review.

However, the performance was

slightly lower than the target 18 per cent annual premium growth of the sector.

The industry contribution to national GDP was 0.9 per cent, compared to a similar contribution in 2012.

According to the National Insurance Policy draft 2015, general insurance business grew by 15 per cent in gross premium income, from Tsh363 billion ($172.9 million) in 2012 to Tsh418 billion ($199 million) in 2013.

Meanwhile, life assurance business volume increased by 29 per cent from Tsh44 billion ($21 million) in 2012 to Tsh56 billion ($26.7 million) in 2013, bringing the total insurance premium for 2013 to Tsh476 billion ($226.7 million), up from Tsh407 billion ($193.8 million) in 2013.

The motor insurance business dominated the sector, contributing 33 per cent of all business. It was followed by fire at 20 per cent, health insurance 19 per cent, and marine insurance 12 per cent.

Other general insurance classes shared 7 per cent each of total general insurance business.

Life assurance was dominated by group life class at 72 per cent, with in-

dividual life policies taking 28 per cent.

Life assurance still makes a low contribution to the economy.

“The contribution of life assurance continues to be about 10 per cent of the total industry premium volume,” notes the policy document.

TRA Principal Research and Policy Officer Beldon Chaula told Insurance Times Magazine that life and health insurance were exempted to make the service more accessible to Tanzanians.

“It was the aim of the government to ensure more Tanzanians are covered by life and health insurance,” said Chaula.

The new legal regime will benefit insurance companies that offer life and health insurance. They include AAR Insurance (T) Ltd, Jubilee Life Insurance Company Ltd, African Life Assurance Company Ltd, Alliance Life Insurance Company Ltd, Jubilee Insurance, Metropolitan Tanzania Life Assurance Company, the National Insurance Corporation (T) Ltd and the Zanzibar Insurance Corporation.

Insurance Times | Feb 2016

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Insurance

Online portal set to reduce woes of Ugandan agents

It is important that the application and licensing process is done in a timely manner so that insurance business and commissions are not lost.

By Maksudi Zamy

26

I

nsurance agents in Uganda will now obtain licences from the Insurance Regulatory Authority (IRA) within two days of applying, following the launch of an online portal.

The system, which aims at improving service delivery in the sector, will cut down the time agents spend on applying and getting licensed from twoweeks to a matter of days.

Introducing the system to agents and managers, IRA Chief Executive Officer Ibrahim Lubega said the move will enhance the roles agents play in the sector – mainly that of contacting potential customers and selling one or more types of insurance policies. Agents, he said, were central to the

Insurance Times | Feb 2016

growth and development of the insurance industry in Uganda.

With about 1,140 agents licensed, it is important that the application and licensing process is done in timely manner so that insurance business and commissions are not lost, Lubega said. The system will ease the agents’ application process and give them an opportunity to track their application status at any given time. It will also improve agency management for insurance companies.

The insurance Regulatory Authority of Uganda (IRA) was established under section 14 of the Insurance Status 1996, now the insurance Act (chap 213) of the laws of Uganda, 2000. The Insurance

The move will enhance the roles agents play in the sector – mainly that of contacting potential customers and selling one or more types of insurance policies.

IRA Chief Executive Officer Ibrahim Lubega

Act came into effect in April 1996, and IRA commenced operations in April 1997.

The main objective of the authority is to ensure the effective administration, supervision, regulation and control of the business of insurance in Uganda. It licenses all persons involved in or connected with insurance companies, intermediaries, loss adjusters and assessors, risk inspectors and valuers.

Licensing Every company requires insurance agents to be licensed, and they are required to obtain licences to sell insurance products. In most cases, sales agents go through complex pre-licensing courses and law examinations before being licensed.An insurance agent’s services are often required by individuals who want to compare insurance products and quotes from different firms. This could be in various areas such as medical (health insurance), life and motor insurance.Most insurance agents feel that the public perceives them mostly negatively. Success as an insurance agent does not come without

a cost because they hear “No” far more times than they hear “Yes” – and it is not uncommon for the “No” to be laced with obscenities and a slam of the door.

Additionally, many people hold insurance agents in low regard; some people equate them to glorified conmen. But for those who can stomach the frequent rejection, the pay cheque and flexibility are worth the effort.

A typical insurance agent spends the bulk of his /her time engaging in marketing activities to identify people who might be in need of new or additional insurance coverage. He /she tries to persuade existing and potential clients to sign new insurance contracts.

In this way, the agents help insurance companies to generate new business. An agent explains various insurance policies and also helps clients choose policies that suit their needs.

Insurance agents usually determine their hours of work and often schedule appointments.

Government regulationThe government has been urged to streamline indus-

try regulation and simplify requirements for compliance by agents.

According to the Chief Executive Officer of the Uganda Insurers Association, Mariam Magala, the burden of compliance in a heavily regulated industry stifles business development and innovation as companies concentrate on addressing regulatory issues rather than strategy and innovation. With the heavy taxation, premium income has been adversely affected, especially following the introduction of value added tax (VAT) on insurance services.

The heavy taxes have slowed the growth of the industry, reducing the growth in premiums. Initially, boda-boda cyclists would pay a premium of Ush4,000 ($1.15) only, but now this has gone up to Ush39,000 ($11.2). This has resulted in a high number of motorcycles operating without insurance cover.

The taxes have also extended the harsh treatment to the agents, because it is now more difficult to persuade individuals to take up insurance cover.Ben Tito, who has worked for one of the prominent insurance companies, said the regulations were too many and continued to affect the agents since their pay is commission-based. This means the more contracts one brings on board, the more the commission.

He maintains that insurance firms have no major expectation from the government because by increasing taxes, the government was trying to raise more revenue to fund its ballooning budget expenditure.

Therefore, the fight to survive is in the hands of the insurance agents and their clients, he said. It is the clients’ responsibility to know what they need and the agents’ responsibility to sell. At the same time, the agents have to establish a relationship of trust to maintain personal clients for many years, but at times this is a delicate balance.

Insurance Times | Feb 2016

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Insurance

Huge potential: 64pc of Tanzanians have never heard of insurance, says study A new study says that most Tanzanians are not aware of the insurance sector or the potential it holds, offering a huge potential market for service providers in the industry.

By Staff Writer

A

ccording to the FinScope Tanzania 2013 survey, 64.2 per cent of the population has never heard about insurance, while 5.6 per cent of the population does not know how or where to gain access to insurance. The study found that 4.8 per cent of the population did not know how insurance works.

But the findings also call for market and regulatory action to ensure fast growth of the sector. It will also take concerted efforts to enable all Tanzanians to understand the concept and importance of insurance in their daily lives.

The sector has continued to play a strategic role within the national economy by providing the national underwriting capacity and contributing towards mobilization of financial resources for sustainable economic development.

TIRA’s 2013 Annual Insurance Market Performance Report shows that the industry has grown at an annual average rate of 19.9 per cent in Gross Premium Written (GPW), from Tsh231 billion ($110 million) in 2009 to Tsh476 billion ($227 million) in 2013.

The national GDP and the finance intermediation sector GDP, in nominal terms, have grown at annual average rates of 16.3 per cent and 18.6 per cent, respectively, between 2009 and 2013.

The insurance industry has therefore demonstrated a higher average growth rate than the national and the finance intermediation sector GDP over the five-year period (2009-2013).

Studies further show that the economy has a low insurance and micro-insurance uptake compared to developed countries.

Contd on page 28 >>

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Insurance Times | Feb 2016

Want the public to take up insurance? Then stop delaying claims, AKI says

By Anne Kiruku

A

study conducted by the Association of Kenya Insurers (AKI) secretariat has revealed that there is vast potential for growth in micro-insurance in Kenya, but that potential customers lack the necessary information to make informed choices on the products available.

The survey, which targeted current and potential customers of micro-insurance products, insurance industry players, MFIs and the industry regulator, also found that existing micro-insurance customers lack the necessary user support; they are therefore unable to benefit fully.

The study, which also reviewed existing secondary data from various sources, revealed that most potential customers understood the value and convenience that comes with micro-insurance and would be willing to purchase the products.

Critical in the push to increase uptake of micro-insurance, the study found

out, was the need to enhance information, support and transparency. Insurers should also form more partnerships in order to widen their reach by leveraging on the trust and infrastructure of the partnering institutions.

The study recommends that the Insurance Regulatory Authority (IRA) and other insurance industry players should improve on information delivery by developing initiatives to sensitise the people on the need and benefits of insurance.

The industry’s image has been tainted by claims of non-payment of claims.

Clients have also complained of slow processing. The sector should therefore work on its image and eliminate negative perceptions towards insurance, the study recommended. There is need for full disclosure, transparency and honesty when paying claims, it says.

For the already existing clients, the study advises industry players to offer more service support to micro-insurance policyholders through building good customer relationships, especially when a claim falls due.

The industry should ensure that insurance agents are well trained and honest to eliminate cases of misrepresentation since they are the ones mostly in direct contact with both potential and existing clients, the report says.

To ensure total victory, the study advises industry players to create more partnerships among themselves so as to fight the battle from a united front.

The survey found out that mass uptake of factors of micro-insurance will require improved penetration through micro-finance institutions (MFIs)and other untested channels. Through such partnerships, there shall be added value to partners’ core products from the sale of micro-insurance. This will make them more interested in offering a variety of products.

Effective systems and technologies that will make processes efficient will also be developed through such part-

nerships. In addition, the industry players must develop flexibility in terms of products and processes; successful micro-insurance requires not only reduced premiums and lower coverage, but significantly redesigned products and processes as well, the study advises.

A strong and clear agreement between the MFI and the insurer should also be developed, but as that is done, it is important that the roles and responsibilities are clear in the relationship.

The insurance industries are advised to improve the suitability of micro-insurance products to match the needs on the ground. The product portfolio should be diversified to cover the actual needs such as education and unemployment if the industry is to get a breakthrough in raising penetration into the market.

The industry should develop a legal framework on how micro-insurance should operate in the country, the study advises. The current regulatory scheme for micro-insurance in Kenya includes all legislation impacting on the delivery of insurance and a number of Acts and their regulations beyond the Insurance Act. Micro-insurance needs to be clearly integrated into the Insurance Act. To achieve its objective of raising penetration of micro-insurance in the country, the industry will need the government support. There is need for the government to put in place deliberate measures that will promote the development of micro-insurance products and deepen its penetration as well.

This has worked in India, where micro-insurance has received support from the government of India via premium subsidies and standardization of products in terms of transparency and affordability.

The study recommends opening of branch offices in areas where the target customers are; this will greatly improve physical access to insurance services, thus boosting insurance penetration even to low income earners.

Insurance Times | Feb 2016

29

Insurance From page 26 >> This calls for effective measures to further improve the insurance sector in Tanzania and to ensure it is affordable and adapted to the needs of Tanzanians.

The Financial Sector Deepening Trust (FSDT) conducted the Insurance Study in Tanzania 2012, which established that 12.7 million adults are not insured. A further 3.7 million adults are insured but still have unattended needs.

It was also found that 7.4 million people, which is about 30 per cent of the adult population, cannot afford insurance since they fall below the poverty line.

Some of the issues to be addressed include creating new business for insurance, building skills and capacity to trigger demand for insurance services, and product innovation.

Others are educating customers through the sales process, streamlining the regulatory framework of community-based health insurance schemes, making the insurance distribution system as flexible as possible, and developing a riskbased framework that defines insurance as low risk so as to apply a simplified system of customer due diligence.

Some efforts have been taken to address these challenges, including forming partnerships with the aim of furthering the development of insurance.

FSDT, in partnership with the Tanzania Insurance Regulatory Authority (TIRA), the Centre of Financial Regulation and Inclusion (CENFRI), FinMark Trust (FMT) and Access to Insurance Initiative (A2II) will take part in diagnostic studies with the aim of hastening the development of the sector.

The studies are done to analyze the insurance sector in Tanzania, to understand its key drivers and constraints, and thereafter to design ways to fasten its growth.

Different stakeholders are involved in the studies, representing regulators, government ministries and departments, insurance companies, agents, brokers, consultants, industry associations, customers, distributors and even potential investors.

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ACB joins hands with UAP, Sanlam to offer insurance agency services

By Special Correspondent

A

kiba Commercial Bank (ACB) has launched a new business arm for running insurance agency services.

The new service has been started in collaboration with Sanlam Insurance and UAP. It forms part of ACB’s strategy to expand services to Tanzanians.

Speaking at the launch in Dar es Salaam recently, ACB general manager Juliana Swai said that under the new business, the bank was set to offer various insurance products that Tanzanians could access through its branches anywhere in the country.

“We are going to co-operate with these insurance companies to offer all insurance products in our 18 branches. In Dar es Salaam, alone we have five branches that are set to offer insurance services to our customers,” said Ms Swai.

The bank, she said, had a vision of empowering Tanzanians to access insurance services easily, bearing in mind that these services have been out of the reach of most Tanzanians.

The services that will be offered include life insurance, which will be done in collaboration with UAP. Others are accident, fire, theft, health, education, personal and family, and other related services that are available in the market, according to Ms Swai.

The Chief Executive Officer of Sanlam Insurance, Julius Magabe, said that Sanlam was determined to enable ACB offer insurance services to Tanzanians at a low cost.

“We want to remove the hurdles hindering many Tanzanians from accessing

Insurance Times | Feb 2016

insurance services. For an individual to access insurance services requires some cost, including time spent, but through the bank one can access the services easily,” said Magabe.

UAP general manager Michael Itimu said that the company – which has branches in Uganda, Kenya and Tanzania – was committed to using ACB branches to offer vibrant insurance services.

“We will pay a commission to them.

We want to combine ACB banking services with insurance services for the benefit of many Tanzanians,” he said.

ACB performance According to the bank’s financial statement for September 2015, ACB total assets grew from Tsh144.1 billion ($68 million) in June 2015 to Tsh151.8 billion (72.3 million) in September of the same year.

There is still a lot of room for expanding insurance services in the country, especially in rural areas.

According to the Tanzania Insurance Regulatory Authority (TIRA), the insurance industry grew at an average rate of 18 per cent for the past five years, but the services have been mainly concentrated in urban centres.

The contribution of the insurance sector to the Gross Domestic Product (GDP) is still dismal. The TIRA report on the insurance sector’s performance in 2013 showed that it contributed to only 0.9 per cent of GDP. This clearly indicates that the sector covers only a small fraction of the total population of Tanzanians.

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Insurance Times | Feb 2016

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Insurance

Online system set to ease agency work

T

he Insurance Regulatory Authority (IRA) has launched an online agent licensing system aimed at improving service delivery in the sector.

The system intends to reduce the time an agent spends on applying and getting licensed by the IRA from two weeks to one day. It was introduced to companies, agents and managers last August.

IRA Chief Executive Officer Ibrahim Lubega said the system was meant to enhance the role agents play in the sector, mainly in contacting potential customers and selling one or more types of insurance. “With 1,137 licensed agents, it is important that the application and licensing process be done in a timely manner so that insurance business and commissions are not lost,” Lubega said.

Lubega clarified that through this procedure, the system will ease the agent application process and give them an opportunity to track the application status at any given time.

The IRA was established under section 14 of the Insurance Status 1996, now the Insurance Act (chapter 213), which came into effect in April 1996. It commenced operations in April 1997.

The main objective of the authority is to ensure the effective administration, supervision, regulation and control of the business of insurance in Uganda. It licenses all persons involved in or connected with insurance companies, insurance and insurance intermediaries, loss adjusters

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and assessors, risk inspectors and valuers.

Every company requires insurance agents to be licensed and is required to obtain licences to sell insurance products.

For sales agents to become licensed, they must do a complex pre-licensing course and write examinations.

Insurance agents are vital in the insurance business because they are always called upon by individuals who would like to compare insurance products and quotes before deciding on the insurance policy that best suits their interests. This applies in various fields including medical (health insurace), life and motor insurance sector.

To succeed as an agent, one should be personable and likable, but also willing to be disliked.

Some people hold insurance agents in low regard, equating them to glorified conmen. But for those who can stomach the professional rejection, the pay cheque and flexibility are worth the effort.

A typical insurance agent spends his/ her time engaging in marketing activities to identify people who might be in need of new or additional insurance coverage.

He/she persuades potential clients to sign new insurance contracts to help insurance companies to generate new customers. An agent explains various insurance policies and helps clients choose what suits their needs.

According to the Chief Executive Officer of the Uganda Insurers Association, Mariam Magala, the burden of compli-

Insurance Times | Feb 2016

ance in the heavily regulated industry hinders business development and innovation as companies concentrate on addressing regulatory issues rather than on strategy and innovation. With heavy taxes, there is a drop, for example in premium income from 13 per cent to 10 per cent following the introduction of value added tax (VAT) on insurance services.

The heavy taxes have led to a decline in industrial premiums. Initially, motor cyclists (boda-boda) would pay a premium of Ush 4,000 ($1.2) only but as of now, it has gone up to Ush39,000 ($11.8), which has resulted in a high number of motorcycles operating without insurance cover. This has also extended harsh treatment of the agents, because it is now a hustle to prospect and convince individuals to join the industry.

Ben Tito, a Kampala resident who has worked for a prominent insurance company, said the regulations were too many and continued to affect the agents since their pay is commission-based, meaning the more contracts one brings to a company the more the commissions and vice versa.

The survival of insurers is in the hands of the insurance agents and clients, because it is the clients’ responsibility to know what they need and the agents’ responsibility to sell. At the same time, the agent has to establish and maintain a relationship of trust to keep people as personal clients for many years.

KNAC: Payments may be forfeited as unclaimed assets

By Staff Writer

T

he fate of the ublic-quoted company Kenya National Assurance Company remains unknown ever since its demise in 2001 when it was placed under official receivership.

Efforts to revive the company proved futile as KNAC was deep in debt and the only way out of the huge mess was to sell its assets.

In March 2014, the company was scheduled to transfer Ksh400 million ($4 million) of policy holders’ money to the Unclaimed Financial Assets Authority (UFAA) in a move that would eventually put a closure to the firm’s fate. The insurance giant collapsed due to mismanagement and asset theft cases by its employees.

Policy holders of the then giant insurance firm were asked to claim their pay-

ments in a period of four months before the insurer transferred all their funds to the UFAA. Officials of KNAC had stated that claim payments stood at Ksh3.9 billion ($39 million) and unclaimed funds held by the insurer were approximately Ksh400 million ($4 million).

The fall of the Kenya National Assurance Company’s was due to mismanagement of the company’s assets attributed to political interference in the running of the firm.

KNAC was running well as a big business in the insurance sector since it had a national reach, until it was declared insolvent because of its immediate liabilities.

The liquidation process of the firm’s assets is an ongoing court case. The Kenya National Assurance Company has been

disposing off property since its closure under its life fund to pay off claims by policyholders.

Government-owned insurance companies in Kenya have little or no presence except for NHIF, a social insurance scheme run by the Ministry of Health.

Measures to revive government-owned companies appear futile, mostly due to corruption and the country’s debt woes caused by heavy government spending.

However, the sector continues to penetrate new frontiers; new insurance products, mergers and acquisitions have also been witnessed. Recently, banks have introduced bancassurance in a move that aims to introduce insurance products to more Kenyans; insurance penetration is currently at a low of 2.93 per cent.

Insurance Times | Feb 2016

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Insurance

A male club: Insurance firms, banks fail the gender test The exclusion of women from key decision making positions in banks with professional associations

Insurance

Banks 15%

12%

85%

88%

By Anne Kiruku

I

nsurance companies have a long way to go when it comes to gender equality on their boards, according to a report by the Institute of Directors Kenya (IOD), an organisation representing Kenyan directors and their interests.

According to the report, female directors make up only 15 per cent of the boards of insurance companies.

This is only slightly better than banks, the other key sub-sector within the financial services sector. The representation of women in the boards of banks stands at a miserable 12 per cent, right at the bottom of the table.

The exclusion of women from key decision making positions in banks and insurance firms is in contrast with professional associations and microfinance institutions, which were leading in women representation in their boards and tied at 26 per cent.

Dubbed “Women’s Representation on Boards”, the report raises questions about adherence to the country’s constitutional requirement that a third of all public appointments must be from either gender. The boards of private companies may also come under pressure to improve gender balance.

According to the report, state-owned enterprises have a 26 per cent gender representation in their boardrooms, as compared to private entities, which are still struggling far behind.

While releasing the report, John Luusa, the chairman of IOD, said that women in boards add a different voice to an organisation and foster creativity. “Women’s varied experiences often bring different voices to an organisation. A key benefit of including women on boards has been to foster creativity and innovation.”

The findings showed that women are strong financial managers and that those organisations with more women on their boards tended to outperform others on a number of financial measures, including return on equity, return on sales, return on capital, share performance and stock price growth.

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Insurance Times | Feb 2016

Organisations with women on their boards tended to be highly innovative and they introduced more new concepts and practices to their industries, as well as establishing structures that facilitate innovation. They also adopt more progressive management practices and provide more training and development for employees, as well as investing more resources in research and development.

According to the report, due to women’s ingenuity, creativity and natural flair for finding solutions to communal challenges, organisations stand to benefit immensely from having equity in gender diversity.

The low representation of women on boards has long been attributed to gender differences, concerns over work-life balance and the board nomination processes. A key contributing factor to low women representation in boards is the historical preference for men in leadership positions.

In Kenya, women represent 52 per cent of the total population and therefore have a significant role to play in the country’s quest for global competitiveness.

The country’s development map, Vision 2030, recognises women’s inclusion in leadership positions – and especially on the boards of institutions – as critical in achieving national goals. As a result, Luusa said, IOD was working to achieve the constitutional requirement of gender equity in

all elective and appointive positions in private companies.

“We are prepared to facilitate this process by sharing with the government our database of qualified women trained in corporate governance and in good professional standing for consideration for appointment to various boards, commissions, and public offices,” said Luusa.

According to the report, the government needs to consider formulating a policy to ensure compliance with the constitutional requirements of Article 27 (8), which states that no more than two-thirds of the members of any elective and appointive body shall be from one gender.

The report also recommends that in support of national values, all publicly listed companies be required to comply with the constitutional requirements on gender equality and equity. The directorate of gender should also collect and share with the public data on the number of men and women appointed to positions in public boards and commissions. Moreover, annual reports of state-owned enterprises should include a breakdown of board members by gender.

The institute has offered to support the government’s effort to manage expenditure in the public sector by undertaking in-house training of all directors of public corporations and commissions if so requested.

Insurance Times | Feb 2016

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Insurance Law

Accidents: People aren’t getting paid due to ignorance

By Deusdedit S. Muhono

R

oad traffic accidents are a major cause of death and serious bodily injury in Tanzania. The essence of this article is to elaborate the practice of insurance in Tanzania and right of indemnity to third parties. The article will discuss individual cases of claimants failing to be indemnified after accidents due to either lack of awareness or failure to meet legal requirements when claiming for indemnity. These are referred to as third parties and are covered by insurance third party schemes.

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. It is an equitable transfer of the risk of a loss from one entity or party to another, called the insurer, in exchange for a payment called a premium. An insurer is a company selling the insurance, which is the promise to wear the insured’s shoes upon the happening of a loss caused by an insured event. An insured or policyholder is the person or entity buying the insurance policy.

The transfer of such risk depends on the insurance rate – a factor used to determine the amount to be charged for a certain amount of insurance coverage, or premium.

Legally, two parties – the insured and insurer – conclude an agreement upon which the losses will be recovered on the happening of an insured event specified in the insurance contract/policy.

In an insurance contract, there is a right of third party.

The third party is a person who is not part to an insurance contract but who is specified or otherwise stated in the contract. Unfortunately, third parties are still suffering – partly because they are not aware of the legal rights and protection available for them in the insurance policy, and also due to the way insurance contracts are structured.

The agreement of indemnity in an insurance contract between the insured and insurer is the lynchpin of the insured’s legal claim, whereby the insurer promises to be responsible on behalf of the insured. Despite the essence of insurance, most of insurers – especially in motor insurance

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Insurance Times | Feb 2016

– tend to delay or deny indemnifying the third party after suffering injuries due to the insured’s negligent, especially in motor insurance policy.

Motor insurance: Mandatory cover Motor insurance is an insurance that is required by law before individuals can engage in driving a motor vehicle.

It is a mandatory policy issued by an insurance company as part of prevention of public liability to protect the general public from any accident that might take place on the roads.

The law mandates that every owner of a motor vehicle must have one motor insurance policy.

It is law in this country, as specified by the Motor Vehicle Insurance Act, that all road users must be covered by a certain minimum level of insurance. The Motor Vehicle Insurance Act (RE 2002), Sec 4(1) states that, “Subject to the provision of this Act, it shall not be lawful for any person to use, or to permit any other person to use, a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, such a policy of insurance or security in respect of third party risks as complies with the requirement of this Act.” It is mandatory, basing on severity and frequency of road accidents. It protects negligent drivers from liability upon happening of a car crash whereby that crash would create damages that the driver at fault would often be unable to pay for.

Indenminty:It is a way of undertaking to place the insured, after a loss, in the same position he would have been if that loss did not occur, or to the same position he was immediately before the loss.

Indemnity in the legal sense may also refer to an exemption from liability for damages. The concept of indemnity is based on a contractual agreement made between

two parties, in which one party agrees to pay for potential losses or damages caused by the other party. A good example is an insurance contract, whereby one party (the insurer) agrees to indemnify the other (the insured) for any damages or losses, in return for premiums (amount of money) paid by the insured to the insurer.

Business Dictionary defines third party insurance as “a liability insurance purchased by insured (first party) from insurer (second party) for protection against claims of another (third party). The first party is responsible for its own damages or losses.”

The insurer agrees to wear the insured’s shoes when the insured risks/perils cause loss or damage to another person.

The loss or damage must be specified (e.g. property damage or bodily injury ). Hence, this coverage of insurance provides protection against liability caused by accidental injury or death of other persons or damage to their property.

Indemnity may be paid in the form of cash, or by way of repairs or replacement, depending on exactly what is spelled out in the indemnity agreement.

In other words, this means protection against future loss or legal exemption from liability for damages. The indemnity does not apply to all classes of insurance. There are several exceptions to the principle of indemnity. Indemnity does not apply in the following policies: 1. Valued policies 2. Replacement cost insurance 3. Life insurance Under a valued policy, an insured collects the face value of the policy if a total loss occurs, regardless of the actual cash value at the time of loss. Such policies are commonly used to insure artwork, antiques and family keepsakes. Some states have enacted valued policy laws under which the face value of the policy must be paid if a total loss is caused by a specified peril such as wind, fire, or lightning.

Replacement cost insurance is another exception to the principle of indemnity. Under replacement cost coverage, the replacement cost of the asset is paid without an allowance for depreciation. This type of coverage is more expensive than actual cash value coverage.

A fourth exception is life insurance. Life insurance policies are commonly purchased to provide income replacement should a breadwinner die. The principle of indemnity does not apply to life insurance contracts. The amount paid on the happening of an insured event is the full agreed amount paid to the beneficiary.

Right of indemnity to a third party In Tanzania, the rules regarding disclosure of information to the third party are inadequate. The right to information does not arise until the liability of the insured is established. This results in the third party conducting litigation with the wrongdoer in ignorance of whether there is in fact an insurer against whom the third party may be able to proceed.

The third party is only able to exercise the right to information against a limited number of people, excluding those who might have relevant information such as insurance brokers.

According to the Tanzania Insurance Act, 2009 sec 59, the insured is required to give full information to the third party

in order for the third party to claim for indemnity. But the Act is silent and does not say what measures will be taken against any person who fails or ignores to do so. Also, it does not give the third party an alternative way or procedure that him/her can follow if that incident happens.

The insured should give notice of a claim in accordance with the terms of a policy; failure to give such notice may allow an insurer to refuse to pay a claim.

The duty to give notification to insurer: An insurer has the right to reject claims due to failure in notification. The Insurance Act should order the insurance company to introduce another condition for a third party to give notification if the insured fails to do so. An insured’s duty should be transferred to the third party if the insured fails or ignores to exercise his duty as per the Insurance Act. This means that it will prohibit insurers from relying on technical defences to defeat third-party claims, such as that the insured failed to notify the insurer of the claim within the time stated in the policy, even if the third party had given this notification instead. Insurers owe the duty of utmost good faith and fair dealing to claimants.

Sometimes, insurers use technical errors to deny or delay settling of claims, even if an insured notified the insurer as per motor insurance policy conditions; they take advantage of the ignorance or lack of awareness of the third party.

The bad faith claims should not be extended to third parties.

Insurance companies save money by denying claims. Third parties should not have to accept a denial as a final judgment, and the stated reasons for not paying can be challenged.

Third parties may find the insurance denial is not supported by the facts of the claim. Insurers delay paying of claims, knowing that third parties will give up. Insurers disobey the Insurance Act Sec 131 Sec (1) by delaying paying a claim; the sections orders an insurer to pay claims within 45 days from the day of submission of the claim.

The Act states: “Every insurer shall pay claims within forty five days of the date of receipt of the executed discharge and where the insurer is enable to settle claims within that time, he may apply to the commissioner for extension of time and the commissioner may grant an extra time of not more than forty five days within which the claim shall be settled.”

This is practically not done in the industry. Hence, there are bad faith claims on the side of insurers, whereby third party claimants are still suffering. Unreasonable delay of claims payment has been declared as a bad faith claim by the insurer, subsection (2): “Where an insurer fails without a reasonable cause to settle the claim within forty five days or within the time extended by the commissioner, that claim shall be treated as a bad faith claim against insurer” To be continued in the next issue Deusdedit Sise Muhono is an Advocate working with the National Audit Office of Tanzania as a Performance Auditor.

This article is based on his personal opinion, research, insurance and legal knowledge; it should not be used as conclusive advice for undertaking any insurance transaction.

Please consult your insurance advisor/consultant for further services.

Insurance Times | Feb 2016

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Insurance

Fraudsters in East Africa increasing - KPMG Among those who commit fraud in Kenya are customers, the supply chain, police, brokers, third parties and underwriters.

By Anne Kiruku

T

he alarming rise in insurance fraud in the East African region is strangling the industry, which is already facing a myriad challenges.

A report dubbed, “East Africa Insurance Fraud Risk Survey 2015” released

by KPMG shows that fraud in East Africa is mostly committed by the supply chain.

The survey reveals that the most common fraud modus operandi regionally is non-disclosure.

In Kenya, according to the survey, fraud is mostly committed by staff.

Among those who commit fraud in Kenya are customers, the supply chain, police, brokers, third parties and underwriters.

From 1-31 March, according to the IRA Insurance Fraud Investigation Unit (IFIU), 26 fraudulent cases amounting to Ksh259.71 million ($2.6 million) were reported.

The hot-spot of fraud was the motor sector, where a total of Ksh18.2 million ($180,000) was paid out to different cases during that time. Fraudulent injury claims took the largest share of that amount, followed by fraudulent damage and theft cases as well as forged insurance certificates.

“We are seeing an increasing number of people pretending to have accidents; some people have taken loans to buy cars and when they are unable to pay they fake an accident so that they are compensated and pay back the loan,” says CIC managing director Kenneth Kimani.

According to the report, fraudulence in the medical sub-sector is second to

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motor insurance. In medical insurance, fraudsters are colluding with hospitals to pretend that they have undergone major surgeries and treatments, while health service providers are overpricing people who have been insured.

“You will find that in some medical service providers, the first thing they ask when you go to hospital is, are you insured? And it seems like they have different prices for the insured and those who are paying in cash; other fraudulent behaviour is when an insured takes their relatives and friends to hospital impersonating as them, especially in health centres without biometric identification,” Kimani added. If the trend is not reversed, the industry will continue to suffer huge losses.

According to the report, the industry is also facing challenges in managing and investigating fraud cases. Corruption in the process is hampering efforts to unearth fraud cases. Lack of knowledge on the depth of the problem has also hindered efforts to bring the culprits to book.

Lack of shared data among players in the industry has also made it difficult to curb the vice. Non-deterrent punishment and unwillingness to pursue cases have similarly affected the investigation process; most insurance companies may be unwilling to go through rigorous court processes due to the huge costs and time involved. Lack of skills and expertise among industry players has also made it difficult to manage fraud cases.

To successfully manage fraud, the report advises that as a region, industry

Insurance Times | Feb 2016

players must move together in the same direction through understanding the risk, sharing data and developing better controls to save money, price effectively and enhance customer protection and longterm sustainability.

The key future consideration as a region is pegged on a better assessment of risk at proposal stage to reduce writing fraudulent business. The focus for Kenya should be to improve internal controls, which will reduce the threat of fraud risk across the sector.

To better deal with fraudulent cases, the report further advises that the sector must invest in improved internal controls, better assessment of risks, creation of a specific fraud strategy and framework, training on fraud in both underwriting and claims, data analytics and enhanced pricing based on fraud exposure.

The report advises insurance industries across the region to share fraud risk data by creating a regional database and intelligence community. Regulations should be harmonised across the region, according to the survey, so as to include a regional fraud Act and regional fraud reporting.

The report says that there is a need to further raise awareness and understanding and drive up minimum standards.

This, the report advises, can be achieved by redefining job roles, training, capacity building, conducting risk frameworks as well as enhancing policy wording, letters and documents.

Procurement law under review to curb graft

Legal and Constitutional Affairs Minister Harrison Mwakyembe

By Jovina Bujulu

T

he Tanzanian government has initiated a review of the Public Procurement Act, which has been fingered by many stakeholders as one of the main contributors of runaway graft in the procurement process.

The move follows President John Magufuli’s hint in his inaugural speech to Parliament that the law would be amended to curb embezzlement of public funds.

To this end, the Law Reform Commission of Tanzania (LRCT) has issued an advert calling for public opinion on how best the law can be improved.

The law was enacted with a view to putting in place a harmonised legal and institutional regime for the administration and management of public procurement.

“The government and its institu-

tions experienced difficulties that have become an obstacle in the smooth implementation of the law, both in terms of costs, value for money and management of timeliness,” reads the advert.

The Law Reform Commission said it would be receiving recommendations, suggestions and opinions from the public, government agencies and private institutions until January 14, 2016.

The advert said that recommendations should be based on five factors: market fundamentals and dynamics of law, procurement process and procedural and institutional requirements, value for money, conflict of laws, and human factors (unethical conduct, personal interest and corrupt practices).

Upon the completion of the research, the Commission will submit

to the government a report and recommendations on how best the Act can be reviewed.

The commission noted that since 2001 when the law was first written, there have been difficulties in its implementation, so much that objectives for its enactment have not been achieved.

Even before Dr Magufuli’s reaction to the Act, Members of Parliament from both the opposition and the ruling CCM had in the last Parliament raised concerns over the irregularities in the Act, saying it contained loopholes that allowed officials to tamper with it to inflate the prices of goods, services and supplies procured by the government.

Insurance Times | Feb 2016

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Insurance

Kenya takes the trophy for fastest growing industry, but huge challenges remain

By Anne Kiruku

K

enya’s insurance industry has been rated the fastest growing in Africa, despite the huge challenges it is facing. There has also been significant growth in the number of foreign and local investors seeking to invest in the domestic market.

The recent upward movement in economic growth is underpinned by a growing middle class, the discovery of oil and gas deposits, major investments in infrastructure projects, and shifting demographics. These factors continue to create immense opportunities for the insurance sector in Kenya. This, coupled with increasing consumer awareness, is pushing up not only the demand for insurance products but, even more importantly, the quality of service.

This demand is pushing insurers to fundamentally re-examine their business models in terms of innovation - channels and products - and reach.

The real estate sector, which is a major income earner for the insurance industry, has been on an upward growth trend in the country. According to the HassConsult quarterly survey (Hass Rental Index), the average prices for all rental properties went up by 1.4 per cent during the first quarter of 2015 and by 8.8 per cent in a year’s period. Given the appreciating property prices, insurance companies are likely to have stronger balance sheets supported by increasing attractiveness of the real estate sector.

Due to the positive growth indices, major investors such as Liberty Life Assurance, Prudential Life Assurance, Saham Group, Barclays Group, Leapfrog and Allianz Group have entered the Kenyan insurance market in the recent past to share in the cake. Their entry is not only enhancing industry stability through injection of core capital, but it is also bringing

40

in much-needed technical expertise into the industry.

The new entrants have also brought with them new innovations in product development and distribution as well as increased global networks. The industry has also witnessed increased activities in mergers, acquisitions and other restructuring, with Britam Holdings acquiring Real Insurance, Metropolitan Group acquiring Cannon Assurance, Old Mutual Group acquiring UAP Holdings, and Pan Africa Holdings acquiring Gateway Insurance.

The acquisitions and mergers represent an opportunity for creating synergies and leveraging on innovation, all of which – if managed properly –could enhance long-term revenue growth and profitability for the sector.

However, the industry is facing a number of challenges. These include the threat of terrorism, sabotage and insufficient capacity to underwrite major infrastructure projects such as the Standard Gauge Railway, oil and gas projects, and LAPSSET, which are currently being insured outside the country. Kenya’s insurance industry does not have sufficient capacity to effectively underwrite terrorism and sabotage risks as well as the major infrastructure projects.

At the same time, existing reinsurance contracts do not provide adequate arrangements for terrorism and sabotage risks. This calls for increased capacity of local insurers to underwrite and retain a proportion of these risks.

According to Kenya’s Insurance Regulatory Authority, the focus is now on putting in place measures to strengthen underwriting capacity locally. Some of the

Insurance Times | Feb 2016

Fastest growing in Africa

measures taken include removal of the one-third rule limit on shareholding for East Africans. This is expected to attract investors from the region to enhance the capacity of domestic players.

However, other obstacles including slow progress toward regional integration, rising inequality, increasing insecurity, and infrastructure deficits are undermining Kenya’s economic performance and growth potential.

According to Commissioner of Insurance and IRA Chief Executive Officer Sammy Mavoke, the future of the insurance market in Kenya is promising, as positive economic growth prospects will certainly go hand-in-hand with deepening insurance penetration. “The Authority will continue to liaise with the various industry players to enhance growth and stability of the industry while upholding the interest of policyholders and insurance beneficiaries,” said Mavoke.

Insurance Times | Feb 2016

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Insurance

Is it time for a marine insurance transit bond?

By Sallu Evarist

E

very international shipment carries potential risks of damage and loss. Moreover, recent incidents of piracy and hijacking on the high seas have presented a growing concern; this situation has led to the disruption of critical business operations and loss of assets.

A proposed international transit and commercial cargo insurance can insulate regional merchants from the debilitating effects of such hazards.

The policy will aim at covering potential risks on all modes of transportation for any incident that may occur to goods in transit. The cover should be both flexible and competitive to pull customers along.

Many underwriters exclude most risks from cargo insurance, leaving a glaring gap in coverage, especially for clients shipping their cargo on high-risk routes. With our understanding of the unique risks and underwriting considerations that are involved, combined with our vast industrial knowledge of the region and related global markets, a cost-effective and comprehensive cargo insurance coverage for all international-bound clients is now overdue. Insurance Times Magazine has taken great interest in the timely intervention of regional insurance companies operating in East and Central Africa, finding out how these firms can provide an end-to-end property-in-transit coverage for goods in transit via the regional ports of Dar es Salaam and Mombasa. This would be for goods destined to or from the East and Central Africa region.

There have also been ongoing debates on emerging challenges, such as container detention fees charged by shipping lines to merchants.

In this regard, we consider that insurance could play a meaningful role by providing a timed insurance bond; this would offer guarantees before the return of an empty container back to the owners within a specified time.

Upon the lapse of this insurance timed bond, the merchants liable become entirely responsible for the approved detention fee and replacement charges in the event of the loss or damage of the container in question.

This approach would alleviate controversial issues, as many stakeholders are of the view that the heavy container deposit fees imposed hamper business and tie up capital.

The timed insurance bond could offer a solu-

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Insurance Times | Feb 2016

tion to this challenge, and failure to abide to the agreed delivery schedule would amount to defaulting. This would disqualify the merchant from such an extended trust. Normal legal procedures would take place for damages suffered.

With a view to the landlocked Central African countries, the free time for cargo in transit is counted beginning from the date of discharge until the return of empty equipment to the agreed depot.

It is the responsibility of the merchant to submit all relevant documents at least seven days before a vessel arrives at the port of discharge, in order to obtain the permit of transit and thus be expected to deliver the container to its final destination before the stipulated deadline, or else qualify for a calendar day penalty in excess thereof.

Officially, container detention charges are a form of liquidated damages for breaching the laytime as stated in the governing contract. The detention charges sometimes cause a loss to the merchant, bearing in mind the numerous unpredictable transit factors before any goods reach their final destination.

A shipment to Lubumbashi from Dar es Salaam may take over a month to reach its destination before another countdown in delivering back the container to a named depot, usually close to the port of discharge where the interchange liability awaits to be cleared.

Cognizant of the shipping line’s needs, both as a way to protect revenue and for timely utilization of equipment , it is prudent for insurance to intervene by providing a guarantee bond to the equipment owners while the container is in the delivery process.

Insurance companies could come-up with a policy that would charge a significant but competitive premium that will relieve the trader from depositing an equivalent cash amount of the container value, which remains until such time the trader returns back the equipment.

Insurance Times is committed to continuous improvement of transit-related products and services through dissemination of information, research review, knowledge sharing with industry stakeholders, dedicated regional underwriters and technocrats.

By sharing new product initiatives and developments, we will be dutifully playing our part over a wide range of risk management issues, both regionally and on a global perspective.

When the floods come and the wind blows… and the house falls

By Nelius Njagi

F

or a long time, construction insurance has been mistaken for house insurance. In fact, if not stated correctly, it could result in the wrong insurance plan being sold.The fact, however, is that construction insurance is generally rare.

Its uptake in East Africa is low, but this may change in the future. The benefits of construction insurance may turn it into a success story.

Construction insurance is also known as builder’s risk insurance. It is a type of property insurance that safeguards against damage to buildings while they are under construction or renovation. It protects the person’s or organizations insurable interest in things such as the type of work that has been done, material and equipment being used.

The policy is bought by the custom builder, also known as the general contractor. There are cases where it can be bought jointly by the contractor, property owner and architect, as these are the key people in the construction of a building.

However, the safest option is when the property owner is the sole buyer of the policy. This is because he or she already owns the building and hence should be the beneficiary in case of any damage.

Construction insurance has a num-

ber of perils that it covers, depending on the policy. Perils such as wind, fire, theft and vandalism are common to every policy. There are natural calamities such as floods, earthquakes and landslides that may occur within the area of construction.

These may or may not be included in the coverage, depending on the type of covers offered. The addition of these perils may also be treated as an upgrade of coverage.

The cover will allow for the replacement or repair of materials such as machinery, equipment, tools and any other physical items used during construction.

It also allows for the redoing of various works such as construction, ancillary and temporary works should any of the perils covered have affected them. It is important to note that rarely does construction insurance pay for accidents or injuries for workers. This is because it is mainly for the building rather than the workers.

In the cover, there may be some additional policy contingencies that can be insured as a percentage of the price of the contract for a predetermined amount of money. These are mostly purchases that may be compulsory according to the building contract. An example is the professional fee, which is the fee charged by architects or engineers during repairs of

insured damage.

The cover may begin at different times, depending again on the policy. Some policies state that the cover begins immediately materials and machinery reach the site, while others begin when the construction process commences. The cover comes to an end upon closing sale of the property, occupancy of the building, or during the set policy expiration date.

Although the trend has not yet caught on in eastern Africa, in various western countries construction insurance is a must in the construction of any building. So far, Jubilee Insurance Company, one of Kenya’s leading insurance companies, has been offering construction insurance in its products.

A local contractor witnessed such a case where the building was situated in a crowded estate, “When we came in one morning, the bags of cement were torn, some were missing and other items lost.

When the owner was called, he did not seem much shaken up about it.” Later in the day, he showed up with more supplies.

It is such cases, promptly settled, that will help construction insurance to pick up in the market and hopefully attract more industry stakeholders.

Insurance Times | Feb 2016

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Islamic Financial Insurance Laws services

Islamic banking: Opportunities for Islamic finance in Tanzania

By Khalfan Abdallah Salim

I

slamic banking was started in Tanzania in 2008 by the Kenya Commercial Bank, followed by the People Bank of Zanzibar, the National Bank of Commerce, Stanbic Bank and Amana Bank. It is only Amana Bank which is a fully fledged Islamic bank in the country. So, what are the opportunities for Islamic finance in Tanzania?

There are number of opportunities that accompany Islamic banking, such as: 1. Education and specialized training on Islamic finance There are few institutions which offer courses or teach subjects related to Islamic finance. Initially, a four-month certificate course was offered by Zanzibar University beginning in 2012. It was followed by Muslim University of Morogoro which also offers a Certificate in Islamic Banking and Finance course.

Both universities have subjects in their economics and business management courses which provide a foundational background on Islamic finance for undergraduate students. Recently, an institute called ZIBRET in Zanzibar has shown commitment to provide certificate and diploma courses on Islamic banking in Zanzibar.

In short, there is lack of knowledgeable manpower and no dedicated institution to provide the required practical training that can help interested persons to be well versed with the operations of Islamic banks.

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Insurance Times | Feb 2016

This gap has been partially but inconsistently filled by external training providers from as far away as India, Pakistan, South Africa, and Kenya, among other countries, who organize short-term training in Islamic banking or finance.

2. Islamic Insurance companies This is an area of uncharted opportunities which has existed for long, but positive signs are emerging that very soon, new or existing conventional insurance players will fill the market with Takaful products. The reason for the delay was from the regulatory side, which has however shown progress recently after inviting stakeholders to submit their opinions on proposed Takaful regulations. It is expected that in 2016, the regulations shall be out, and chances are high that the market shall start to witness Takaful companies.

3. Islamic wealth management services This is a little understood opportunity and a recent development in the Islamic finance field. Tanzania has witnessed a growing Muslim middle and upper class that might requires financial advisory services centered on wealth management within the ambit of Sharia, i.e. Islamic teachings. This author is unaware of any firm which has taken the challenge and focuses on providing Islamic wealth management services. >>

4. Sharia advisory services firms Meantime, all banks in Tanzania offering Islamic financial products have inhouse Sharia advisory personnel and have constituted Sharia boards. However, this service can be outsourced if there was a reputable firm to offer on-time Sharia advisory services on the operations and offerings of the banks or Takaful companies and at reasonable cost. This firm can also provide Sharia review and audit services, legal documentation services as well as arbitration services.

5. Islamic microfinance To date, there are not more than five Islamic microfinance institutions, which operate in limited areas of the country due to limited resources and expertise. How-

Pamoja, katika njia sahihi

ever, there are more than 40 microfinance institutions and thousands of SACCOs across the country. In Tanzania, a majority of self-employed individuals meet their needs through carrying out micro-businesses and small-scale farming, hence Islamic microfinance has a huge market opportunity to do business profitably and change lives.

6. Islamic Funds There are so many conventional funds, such as Wekeza Maisha Fund and Watoto Fund. These funds have billions, which they mainly invest in fixed income portfolio such as fixed deposit and Treasury bills. With the country on a steady economic growth path and with its huge potential in the real estate sector due to

the increasing demand for low cost houses and office premises, Islamic funds that may focus on the real estate sector, among others.

All these opportunities can be taken up today; I trust reader will make an informed decision before taking up any of them. Wish you the best!

Khalfan Abdallah Salim is a professional Islamic banker, having practiced Islamic banking since 2008. He holds an MBA (Islamic Banking and Finance) from the Academy of International Modern Studies (AIMS), UK. Currently, he works with Gulf African Bank based in Nairobi, Kenya as a Manager (Head), Sharia Department. Tel: +244 788 297400, +254 702 544111.

Wekeza kidogo kidogo, upate gawio halali I n s u r a n c e

45 ya T i m e s | F e b 2 0 1 6 Benki Kiislam

Five products from Iringa, Njombe benefit from SAGCOT partnerships

By Staff Writer

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he Southern Agricultural Growth Corridor of Tanzania (SAGCOT) recently held its 2015 Annual Forum consultations and discussions with stakeholders, during which it visited projects across five agricultural commodity value chains.

The two-day Ihemi Cluster field visit started on 1 December 2015, with partners and stakeholders then convening for a one-day Partnership Forum in Dar es Salaam.

According to a statement by SAGCOT, the learning and commitments generated through the field visit were brought to the wider forum during the meeting to determine the next steps for progressing activities in the Ihemi Cluster, and to agree on priorities for activities in the Corridor in 2016 and beyond.

The “Ihemi Cluster” comprises the districts of Iringa and Njombe regions, the geographical focus of the event. The five agricultural commodity value chains of interest involve dairy, soya/animal feed, tomatoes, tea, and potatoes.

As a flagship, partnership-based approach to agricultural development, SAGCOT’s Forum events are meant to be inclusive and a collaborative effort. This brought partners together from farming communities, civil society, government, and local and global companies.

The Ihemi Cluster is one of six high potential regional “clusters” where significant progress has already been

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Insurance Times | Feb 2016

achieved. It is expected to provide lessons that can be replicated across other geographical clusters.

Highlights of the past year included the launch of a tomato partnership that brought together 14 partner organizations, with the planned inclusion of 10,000 smallholders.

There was also significant growth of potato partnership with 15 partners and planned inclusion of 11,000 smallholders.

Also, more than 3,600 smallholders have already been integrated into soya and animal feed value chain partnership.

A School Milk Programs to promote nutrition and alleviate stunting has led to increased milk consumption through dairy partnership.

“As a flagship partnership-based approach to agricultural development, SAGCOT’s Forum events are inclusive and collaborative, bringing partners together from farming communities, civil society, government, and local and global companies,” said the statement.

According to the statement, last year’s forum identified high potential value chains for tea, rice, dairy products, tomatoes, potatoes as well as soya.

The invite-only discussion forum also featured sessions on access to agricultural inputs, progressing the partnership approach, improving infrastructure, and developing innovative solutions to agricultural finance, environmental sustainability and green growth.

Insurance Times | Feb 2016

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Health and social welfare

Rwanda launches campaign to popularize health insurance A three-month national campaign to encourage Rwandans to join the country’s communitybased health insurance scheme, locally known as Mutuelle de Santé, has been launched.

By a Correspondent

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he campaign was launched during the monthly community work exercise, Umuganda, with officials at different levels of government delivering a message to people at the grassroots to join the insurance scheme.

According to Alexis Rulisa, the head of the community-based health insurance department (Mutuelle de Santé) the Rwanda Social Security Board (RSSB), the national launch took place in Rukara Sector, Kayonza District, and was presided over by Prime Minister Anastase Murekezi.

The subscription rate to Mutuelle de Santé is at 63 per cent, which means that more than 3.5 million Rwandans are yet to register for the insurance scheme nearly three months after the RSSB took over its management.

For three months since last December, several activities will be conducted to sensitize Rwandans – especially the youth – to subscribe to Mutuelle de Santé.

Rulisa said the awareness campaign will be conducted through community meetings, the media, as well as taking registration services for the scheme closer to the people.

“We hope that these measures will make a difference in boosting subscription to Mutuelle de Santé. We would also like to invite all Rwandans to help us in this campaign by telling their neighbours, relatives, and employees that it’s important to get health insurance,” he said.

The government tasked RSSB to manage Mutuelle de Santé at a time when subscriptions to the scheme were drop-

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Insurance Times | Feb 2016

Women at a clinic wait for their children’s medication under the Mutuelle de Santo scheme.

ping, Rulisa said. RSSB hopes to attract people back to the scheme by improving its financial management.

Rulisa said some subscribers were giving up on the scheme when they couldn’t access services, such as the medicine they needed from hospitals and pharmacies in the country.

RSSB hopes to reverse the trend by paying hospitals and pharmacies on time so they can procure the medicines needed by patients insured with Mutuelle de Santé, he said.

“We are going to explain to the people that there are a lot of benefits for subscribing to Mutuelle de Santé, because we are going to improve our services,” Rulisa said.

While medical insurance is about solidarity among members of the scheme, officials at RSSB say many Rwandans are yet to adopt the habit of being covered all the time, leaving those who are sick or susceptible to get sick with the burden of paying for their own medical services through Mutuelle de Santé.

Rulisa said some people who feel that they don’t tend to get sick, such as young people who live alone and have no families to look after, tend to be reluctant to join Mutuelle de Santé.

This, he said, makes it challenging to operate the scheme because the less subscribers it gets, the harder it becomes to raise enough funds for medical care.

“We need to convince the youth that the right time to get health insurance is when they are healthy,” Rulisa said.

RSSB targets to realise a 100 per cent subscription rate to Mutuelle de Santé by December, and the three-month sensitisation campaign is one of the means to achieve that objective, Rulisa said.

Meanwhile, Rulisa also addressed the 2015 Diaspora homecoming day in Kigali, where he urged Rwandans to keep paying health insurance and access health care.

The event involved Rwandan communities abroad (RCAS) and was organized under the umbrella organization of the Rwanda Diaspora Global Network (RDGN), in partnership with MERGIMS Company.

“The diaspora communities have a big role in contributing to the government’s agendas. Through working together and networking, you can promote the progress of Mutuelle de Santé by paying annual premium for Rwandans who cannot pay for themselves,” he said.

He added that Mutuelle de Santé covers a majority of Rwandans. He regretted that some were not enthusiastic about it, and said that RSSB will continue sensitizing Rwandans.

“The country’s community health insurance subscriptions increased from 76 per cent in 2014 to 78 per cent this year. The subscription rate is targeted to reach 100 per cent when Rwandans participate in the insurance scheme,” he explained.

Besides the one-day conference, there was a mini expo where members of the Diaspora exhibited their services.

RSSB also showcased its housing projects.

Meanwhile, MTN-Rwanda has donated Rwf3 million ($3,980) to support the families of disabled veterans to acquire membership to Mutuelle de Santé.

The donation, made through the Ministry of Local Government and Social Affairs, will benefit 1,000 people from vulnerable families.

Receiving the donation at the ministry head offices on Friday, Minister for Local Government Francis Kaboneka thanked MTN and said the support will go a long way in helping people who have no access to health insurance.

MTN-Rwanda Chief Executive Gunter Engling said the telecom giant cares about its customers’ health and the donation is its way of giving back to the Rwandan community.

The Chairperson of the Rwanda Demobilization and Reintegration Commission (RDRC), Jean Sayinzoga, said the donation was a great support for the families of disabled ex-combatants who have been struggling to meet contributions for Mutuelle de Santé.

“The law stipulates that we pay health insurance for a disabled veteran only, but their families also need support.

We have about 3,000 families of disabled veterans and we are always advocating for all these families to be supported through Mutuelle de Santé,” said Sayinzoga.

MTN has also pledged to work with the disabled veterans by recruiting them to sell airtime as a way of helpig them earn a living, he said.

Mutelle de Santé is a health insurance scheme financed both by the state and individual contributions through insurance and direct fees for services.

Members pay annual premiums of approximately $6 per family member (increased in 2011 from $2 per person), with a 10 per cent service fee paid for each visit to a health centre or hospital.

NHIF launches electronic customer service centre

By Staff Writer

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he National Health Insurance Fund (NHIF) and SoftNet have launched a customer service centre which will receive and respond to various complaints received electronically.

The centre will be the first place to find information and clarification on various issues related to the fund’s services, thus eliminating or reducing the need for members to travel to NHIF headquarters to access services they could have easily accessed through phone or text messages.

“NHIF has established this centre with the aim of resolving complaints and challenges through improving access to accurate and timely information to members, who sometimes need emergency care,” said NHIF Acting Director General Michael Mhando.

He was speaking to reporters at the inauguration ceremony of the centre of communication and services via mobile phones to NHIF customers in Dar es Salaam.

He said the views of various stakeholders to the Fund will be delivered via telephone number 0800 110063, email info@nhif.or.tz and through communication on the Internet (social networks and mobile phones).

He said the establishment of the centre will enable sending information to members and stakeholders in general.

“I call upon all health stakeholders in the country wherever they are to use number 0800 110063 for any communication to the Fund so that we can deal with the matter by answering their questions. They should also give us feedback on the services they have received from NHIF,” said Mhando.

NHIF has also joined in the Government Web under the Electroic Government Agency Network (eGA) where critical information and services are available.

Insurance Times | Feb 2016

49

Infrastucture development

In shipping, insurance can easily replace container deposits Insurance, the way we know it today as a business or profession, originated over 500 years ago arising from tribulations and losses suffered by British shipping merchants during their trading voyages to India and the Americas.

By Sallu Johnson

T

he high costs incurred led these traders to conduct regular meetings and consultations at Henry Lloyd’s coffee shop located on the banks of the River Thames. At these meetings, the merchants shared their experiences and eventually agreed upon a basis to voluntarily compensate aggrieved parties from among themselves to minimize the effects of loss and sustain their businesses.

From this rudimentary loss-sharing arrangement by these merchants, insurance was born – with marine insurance becoming the oldest class of insurance.

During this period, two major causes of losses for maritime traders were vagaries of the weather and the piracy menace – predominantly in South East Asia and the Arabian Gulf – perpetrated exclusively

by Turkish piracy kingpins in the likes of Ali Bey. Over the past couple of centuries, maritime commerce has grown tremendously and become the world’s number one channel for distribution of goods and services across the globe, based on internationally-established processes and procedures to guarantee best practice.

Marine insurance policy has become

50

a critical platform, offering traders protection and peace of mind as they move goods and drive business interests and services around the world, since it provides compensation in case of losses arising from risks covered in the policy.

The four areas of risk relating to marine policies issued by insurance companies include the following: • Cargo, which includes goods carried and transported on the vessel • The vessel itself, which refers to the hull • The freight, or the amount or value paid for hire of a ship or transporting goods • Losses or damages caused to other parties.

Marine policies cover a wide array of risks including fire, theft, and collision.

Due to the diversity of perils, marine policies are conventionally issued by insurers to cover “perils of the sea”.

Due to various developments and changes in risk profiles in different parts of the world represented by events such as political violence and terrorism, including piracy and hold ups, there has been significant impact on underwriting criteria and practices in marine insurance.

Insurance Times | Feb 2016

Other areas impacted include increases in premium rating, risk mitigation measures, choices in voyage routes, exclusions or ultimate declinature for some specific risks. In all such cases affecting the marine insurance policy value chain, the trader ends up worse off.

Currently, the high risk areas most affected by increased risks arising from losses due to theft, violence, piracy and terrorism are the coast of Somalia, the Arabian Gulf and the West African coast.

Traders with goods passing through these routes pay extra premiums, including acceptance terms to mitigate added risks.

In East and Central Africa, the main

setback currently experienced by traders especially from landlocked countries such as the DRC, Zambia, Burundi, Rwanda and Uganda, who import goods through the ports of Mombasa and Dar es Salaam, is the high penalties levied by shipping lines due to late or non-return of containers to the designated port within the deadline stipulated in the contractual period.

The non-chargeable free time for cargo in transit is counted starting from the date of discharge until the date of return of empty equipment to the agreed port.

To facilitate transit and smooth operations, shipping lines require traders

to submit all relevant documentation a minimum of seven days before arrival at the port of discharge. Before taking up a container for delivery to its destinations, merchants are required by shipping lines to make a cash deposit equivalent to the value of the container as security in case of default.

Customs broker(s) acting on behalf of respective merchants in the hinterland are required to deliver container(s) to their final destination, which also includes a liability to return them back to named depots before expiry of the time limit as prescribed in the governing contract. In case of default, a daily surcharge for each day in excess of the limit is levied on the respective Customs broker, by the shipping line which offered a transit release.

Although these container default levies represent liquidated damages for breach of lay time in accordance to mutual performance contracts, in many cases this has been one of the impending blocks to traders, who mostly end up accumulating high and exorbitant amounts.

This ultimately results in many being

kicked out of business.

While there have been improvements in port operations, infrastructure development has on the other hand resulted into a significant drop of transit container detention, thus yielding a higher corridor productivity, comparatively.

Shipping lines are now subsequently relieved of their container lay time concern in the port termed –demurrage – and on the quick transit container turnaround to and from the hinterland, where the goods are destined to.

It is high time now that container cash deposit as demanded by shipping lines be replaced by insurance bonds, where a competitive premium could be charged to each transit container for a shipping line release beforehand. The insurer will provide the necessary guarantee to the respective shipping lines to facilitate transit business.

Cash container deposits may essentially be beyond many traders, particularly those from small and medium companies whose financial capability could be over-stretched by this demand. It is at this juncture where insurance services could significantly help and make a remarkable contribution to a vibrant regional economy.

These container default charges represent an extra financial risk or gap and a burden to traders, and can best be mitigated through a suitable insurance cover. Such an insurance product can be packaged either as a standalone or an embedded product within a substantive marine policy. In cases where such a product may be a pre - existing extension in a marine cover, the onus to market and popularize rests with the insurer.

There is an urgent need for regional insurers and related institutions to consider the introduction of an affordable and credible container deposit risk policy to protect East and Central African traders from charges levied by shipping lines to cover the risk of non–return or on default through usage of containers beyond the allowed time.

To avoid abuse of the policy by consumers, such a policy is to exclude risks that are associated with deliberate and intentional conversion of its use or for non-authorized private ending.

Sallu Johnson is a Dar es Salaam-based transport economist

Insurance Times | Feb 2016

51

Infrastructure development

Booming population leading to fast growth of real estate sector

By Staff Writer

T

he real estate sector in Tanzania has seen vibrant growth in recent years. This has been accelerated by a strong and sustained economic growth averaging 7 per cent and a fast growing population of 50 million.

Efforts by the government, in partnership with global non-profit institutions and foreign governments, to meet the growing demand of affordable housing have further contributed to this growth.

Tanzania’s population is estimated to be 53.47 million and is expected to more than double by 2050.

The housing demand has also been boosted by easier access to mortgages, with the number of mortgage lenders in the market increasing from thee in 2009 to 21 in 2015, and the average mortgage interest rate in Tanzania falling from 22 per cent to 16 per cent.

The current demand in the country is estimated at 200,000 houses annually, with a total housing shortage of 3 million houses at present.

Dar es Salaam, Tanzania’s commer-

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cial capital and Africa’s fastest growing city, has a current population of about 4.3 million, which is expected to quintuple to about 20 million by 2050.

Housing prices per square metre average $1,200 in Dar es Salaam, as against $1,235 in Nairobi. The rent for a one-bedroom apartment in the city center is around $775.3 a month in Dar es Salaam, while this goes for $ 444.5 a month in Nairobi.

The concept of absolute ownership of land is not recognized in Tanzania, where people have the right to use and occupy land in accordance with its approved use.

Foreign companies and individuals wishing to have rights to occupy and use land can only do so by acquiring derivative rights, applying to the Tanzania Investment Centre (TIC) or to landowners who have been granted the right of occupancy.

Tanzania has a predominantly rural population, with only 31 per cent of the population urbanized. The country’s rapid urbanization rate was however estimated at 5.39 per cent in 2013/2014, above the

Insurance Times | Feb 2016

average of 3.9 per cent for African cities in the past decade. This constitutes the main factor driving the development of the real estate sector in the country. This is especially in the commercial capital Dar es Salaam, but also in other major urban centres such as Mwanza, Arusha and Mbeya, which are attracting rapid growth due to the agriculture, mining and tourism sectors.

In addition, Tanzania has one of the youngest populations in the world, with an average age of 17.3 years. This is expected to increase to 22.2 years by 2050 and represents a high potential growth for Tanzania’s real estate sector as this segment of the population forms the largest borrowers in the country.

This young and fast-growing population represents most of the Tanzanian housing demand through either commercial loans to develop their own properties, or mortgage finance to acquire already built projects.

Customer Service

Customer care and insurance: The race is on…

By James Norman

U

nique dynamics playing out in the East African insurance sector – such as a greater awareness of insurance and greater demand for products – are driving changes ranging from mergers to consolidations and new entrants; alongside proposed new regulations. This is underpinned by changing distribution channels – how insurance is sold, driving greater financial inclusion.

Insurers’ reputations are now on the line.

Reputation is the biggest asset and takes the longest time to build, but is the fastest to go in today’s instant world.

The regulations in the sector are designed to enhance its sustainability through greater protection for the customer. Tanzania is at the forefront of entrenching such robust regulations.

As more people access insurance and look to close the protection gap, insurers are servicing larger customer bases in new ways, with new mind-sets and customer care as the new battlefield.

The reality is that every customer – regardless of whether it is a new customer or

an old and loyal one, or whether the customer is coming from the village or town – should be treated with the same respect, fairness and consistency. This is an application of conduct risk principles, which is a new concept in East Africa – including Tanzania.

Without customers, there is no business; the newest challenge for any East African insurer is how to increasingly look after their customer to get this consistent and fair delivery. Insurance is a product you cannot see, touch or feel. What the consumer buys is peace of mind and protection in the event there is a claim. So, in many ways they are buying a service they do not want to use but need to have.

That is not to say each and every claim should be paid. The key is managing a claim quickly, fairly and transparently to ensure the right decision is made. Not all claims are covered under the policy and not all are valid, and we can play a key role in this delivery through capacity building risk frameworks and integrating technology and analytics.

Any insurer who does not embrace customer care is in difficulty. This is a way in which insurers can differentiate themselves; >> Insurance Times | Feb 2016

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if everyone in the organisation from the receptionist to the CEO gives 1 per cent extra, they will all reap the rewards.

Customer care has several facets. First, it is visual: You do not get a second chance to make a first impression! An attractive broker’s or insurer’s office will create a warm impression; well dressed and friendly staff will keep that impression going - a handshake, a smile and above all timely delivery are critical. Do not keep the customer waiting.

Second, it is also technical: Insurers cannot bamboozle customers with small print and jargon. Less is more when it comes to insurance products. So, customer care is about breadth of knowledge and geography – insurers must understand their policies, be able to explain these simply, and understand the unique emotional and cultural sensitivities of their clientele.

Making an insurance claim is stressful, so there has to be a balancing of empathy and the right outcome – this is what makes up the customer experience.

Above all, customer care is a culture. It should be the number one strategic priority of any CEO and the whole company should be built around the customer. This runs from product design, service, and claims.

It covers everything from policy wording, call scripts, letters, complaints and litigation. The culture of customer care should be automatic and subconscious.

The way forward is to marry innovation and technology with conduct risk principles. Therefore, it is only insurers who use social media and technology to monitor customer satisfaction proactively (not reactively after the customer complaint has gone viral) and who use predictive underwriting to design exciting, well balanced products to make a difference, who will win this battle.

With proposed harmonisation of EAC regulations, customer care is climbing the agenda. The race is on and East Africa can look forward to more products, more innovation, and service with a smile.

We all have a critical role to play in supporting the sector to develop a truly customer-centric culture that will drive greater sustainability.

James Norman is an Associate Director/ Insurance Sector Lead with KPMG East Africa. Email: jamesnorman1@ kpmg.co.ke The views and opinions in this article are those of the author and do not necessarily represent the position of KPMG. 54

Insurance Times | Feb 2016

Your job is on the line? In Zambia, Barclays will pay you

By Staff Writer

B

Barclays Bank Zambia (BBZ) acting Managing Director Banja Kayumba

arclays Bank Zambia (BBZ) has launched a salary retrenchment insurance policy aimed at providing financial cover to its customers in the event of loss of employment.

BBZ and Barclays Life Zambia (BLZ) have partnered to provide a range of insurance products in the Zambian market.

The retrenchment insurance cover, which is the first of its type to be offered in Zambia, will cushion account holders against the sudden loss of a job.

Speaking during the launch in Lusaka last December, BBZ acting managing director Banja Kayumba said the sum insured available under the product would be independent of the level of the actual net salary.

“The sum insured will be paid as cash over a period of six months into the customer’s account,” Ms Kayumba said.

Ms Kayumba said that BBZ was trying to change the face of banking in Zambia.

BLZ acting managing director Rita Chisela said the salary retrenchment cover was meant to ensure that family needs are met even as the breadwinner seeks alternative in-

come-generating opportunities.

Pensions Insurance Authority (PIA) registrar Martin Libinga implored the industry, through Insurance Association of Zambia (IAZ), to continue working with the Authority in scaling up awareness campaigns.

Libinga said PIA was committed to work closely with its regulated entities to ensure that the industry grows to levels that will significantly contribute to the country’s economic growth.

Currently, there are 19 banks operating in Zambia, including AB Bank Zambia Ltd, Access Bank Zambia Ltd, Bank of China (Zambia) Ltd, Cavmont Bank Ltd, Citibank Zambia Ltd, First Alliance Bank Zambia Ltd, Indo-Zambia Bank Ltd and Intermarket Bank.

Other banks are The International Commercial Bank Zambia Ltd (ICB Zambia), Investrust Bank Plc., Stanbic Bank Zambia Ltd, Standard Chartered Bank Zambia Plc.,United Bank for Africa Zambia Ltd, Finance Bank Zambia Ltd (FBZ), Barclays Bank Zambia, Ecobank Zambia, FNB Zambia, National Savings and Commercial Bank (NATSAVE) and Zambia National Commercial Bank Plc. (Zanaco).

Finance, economy and business

CRDB Bank announces plans to enter Zambia, DRC markets CRDB Bank Plc, a private commercial bank headquartered in Tanzania and with branches in Burundi, has announced plans to extend its operations to Zambia and the Democratic Republic of Congo (DRC).

By Staff Writer

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he expansion will be expected to utilize the bank’s larger lending capacity after a successful rights issue in August 2015 that extended its capital base to over Tsh500 billion ($238 million).

The rights issuance of 435,306,432 shares at a price of Tsh350 (17 US cents) helped CRDB to raise its lending capacity to over Tsh150 billion ($71.4 million), an amount large enough to enable the bank to use the proceeds not only for national but also regional expansion.

The bank is currently finalizing feasibility studies for both countries, and it expects the opening of new branches in 2016.

The exact date has not been released.

The success of the issuance of rights encouraged the bank to target other markets in sub-Saharan Africa. Currently, it is evaluating the regulatory environment and customer profiles to anticipate the market, said CRDB Managing Director Dr. Charles Kimei.

The bank has opened 36 new branches in the Tanzanian market, extending the total network to 166 branches. It also has over 400 ATMs and 36 service centres. In addition, it has improved its mobile and

With a strong balance sheet of over the TZS 5 trillion, the bank is aiming also at bigger borrowers abroad.”

Dr. Charles Kimei.

CRDB Managing Director

Internet banking services. This rapid expansion and improvement in service delivery has prepared it for further expansion abroad, Dr. Kimei said.

With a strong balance sheet of over the TZS 5 trillion, the bank is aiming also at bigger borrowers abroad, he concluded.

According to the last company’s quarterly results, CRDB extended its balance sheet from TZS 4.9 trillion as of June 30th, 2015 to TZS 5.1 trillion in September 30th, 2015.

CRDB currently accounts for 20.50%

of the USD 6.78 billion lent to private sector in Tanzania with approximately USD 1.39 billion in loans as of September, 2015.

There are currently 19 banks registered in Zambia while 29 in DRC with Access Bank, Barclays Bank, Citibank, Ecobank and Stanbic Bank with presence in both countries.

Meanwhile, Tanzania and DRC share a total of 7 banks named Access Bank, Advans Bank, Barclays Bank, Citibank, Ecobank, Stanbic Bank, and United Bank for Africa.

Insurance Times | Feb 2016

55

SMEs set to smile all the way to the bank after ATI steps in

By Staff Writer

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he African Trade Insurance Agency (ATI), a pan-African trade insurance company, has introduced a product designed for small and medium-sized enterprises (SMEs) in Tanzania.

The new product aims to reduce the existing lending gap between banks and SMEs due to the lack of collateral to secure loans. The agency will provide banks with a cover against the risk of non-payment.

In a recent statement, ATI pointed out that a number of banks in Kenya had already lined up to sign onto the product. ATI now plans to launch this product in Tanzania within a few

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months.

“Our approach to finding an effective solution started with the idea that we wanted to help banks to lend safely to as many clients as possible. We hope this product will continue to evolve to help them spread their financing to under-served populations, such as SMEs, with the objective of bringing them into the formal financial arena,” said ATI Chief Executive Officer George Otieno, Tusekile Kibonde, the newly appointed ATI Tanzania Representative, hopes that the product will improve Tanzania’s World Bank Index standing for companies’ ease of obtaining a bank loan, which is currently fourth in the East African Community after Kenya, Rwanda, and Uganda.

“Tanzanian companies are prac-

Insurance Times | Feb 2016

tical, and I believe ATI has achieved success in this market precisely because we offer practical solutions — and based on the response from the business community, I believe there is still room for growth here, particularly in the energy sector,” said Ms. Kibonde.

ATI was formed in 2001 by Tanzania and other countries in the Common Market for Eastern and Southern Africa (COMESA), with the support of the World Bank. Its purpose was to facilitate, encourage and develop the provision of insurance-related products, guarantees and other financial instruments in order to promote trade and productive activities in Africa.

The continental insurer has established its presence in Tanzania since 2010 and has facilitated operations worth over $1.5 billion.

Insurance Times | Feb 2016

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Finance, economy and business

Dar urged to empower local SMEs in the gas and oil sector

By Staff Writer

T

he government should empower small and medium enterprises to supply goods and services to the gas and oil sector as the best option to achieve inclusive growth in the lucrative industry.

Aberdeen City Council Director, Gordon McIntosh, said this while sharing the experience of the Scottish City in the industry. He said the government ought to help small businesses to identify available opportunities as well as issue financial support in the form of grants and loans.

McIntosh said Mtwara is a potential gas and oil hub for East and Central Africa, and challenged the government to work closely with the private sector to realise the dream. “Central to development is the planning process,” said McIntosh. He added that it was critical to have structural planning for houses, industrial land and other essential infrastructure for development.

McIntosh, who boasts a 36-year track record developing the energy sector in the Aberdeen region, said the Scottish city had few local active businesses by the time it discovered gas and oil, with everything brought into northeastern Scotland by the oil companies.

“But the council and chamber of commerce wanted to increase the local content... and we wanted to get

Aberdeen City Council Director, Gordon McIntosh

as many as possible small enterprises in the oil sector as possible,” he said. This fits well with the Tanzanian situation.

McIntosh however warned against excessive public expectations on the oil and gas industry. Although it can be influential in development, he said, the sector was not the panacea to all possible problems. “Even in Aberdeen, there are still problems of unemployment and poverty.”

The oil sector also comes along with some social problems, including prostitution, Mr McIntosh said during his presentation at the British High Commissioner’s residence in Dar es Salaam.

Ms Dianna Melrose, the British High Commissioner to Tanzania, said there were many ways that the oil and gas industry could help local SMEs to grow.

She cited an example where she visited Mtwara recently and found the gas company contemplating to import fencing fire from South Africa. The High Commissioner intervened and a local manufacturer was assisted to produce to the required specifications.

“This is a handsome deal that is going to transform the local company,” said Ms Melrose, noting that the UK was firmly committed to support Tanzania to exploit its gas and oil resources for the benefit of all citizens.

Insurance Times | Feb 2016

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Finance, economy and business

High interest rates choking mortgage uptake, but Kenyan market remains vibrant

By Elizabeth Wahinya

Home seekers have shied away from taking home loans and sought other affordable options

The mortgage purchase option as a home ownership choice has proved to be a major financial burden to many buyers in Kenya, especially with recent hikes in interest rates.

According to a Central Bank report, there is a low uptake of mortgages in the country. There are only 15 mortgage lenders, being banks and microfinance institutions, servicing 22,013 accounts in a country with 43 million people.

Home seekers have shied away from taking home

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loans and sought other affordable options – such as own construction and cash purchases.

The Central Bank report estimates the size of Kenya’s mortgage portfolio at Ksh164 billion ($1.64 billion) as at December 2014, up from Ksh138.1 billion ($1.38 billion) in 2013, representing a growth of 18 per cent.

The average mortgage loan grew from 6.9 million in 2013 to 7.5 million in 2014, a growth of 8.7 per cent.

Despite the 18 per cent growth in the overall loan

book, the number of mortgage accounts increased by only 10 per cent, an indication of low mortgage uptake.

The low mortgage uptake in the country is attributed to soaring property prices and low levels of income that cannot service a mortgage. As an agricultural based economy, moreover, most rural citizens live in their own houses. Expensive initial costs when taking a mortgage and rising interest rates have discouraged potential homeowners from borrowing.

“Soaring high interest rates are projected to become a major hindrance for homeowners; commercial banks will offer mortgages at an average rate of 25-30 per cent from the previous 15 per cent per annum, compared to 1-2 per cent in developed markets. This means that in every four years, a mortgage account holder would have to double the amount,” said Cytonn Investment’s Shiv Arora.

He added that there is no target appreciation in mortgage uptake and more efforts are needed from the government and the private sector to encourage mortgages. “The reality is that mortgage uptake is a pure affordability game – it is too expensive for Kenyans. With the

increased urbanization and growth of the middle class, there is a need to look for better ways to address housing issues.”

This can only be achieved through engaging the private sector in the provision of affordable quality houses, like Nairobi County is now doing by redeveloping city estates so as to increase their density. Developing infrastructure to open up satellite towns will enable developments in places where land prices remain affordable.

Mortgage account holders also need improved access to credit information to improve price risk and increase information in the market.

Banks should increase capital market products that promote real estate development for affordable segments.

The recently introduced REIT’s (Real Estate Investment Trust) by Stanlib Bank is one such product that will enable home developers to own and manage income-generating real estate projects for the benefit of their investors.

“The REIT is a unique investment

vehicle that takes a building and turns it into an investment instrument. Having been introduced in the Kenyan market in 2012 by licensing bodies IRA and CMA, the product never got to see the light of day as no steps were taken to set up REIT until recently,” said Arora.

Home and commercial developers will access investment opportunities available in REIT estates at a retail market level – these being commercial, residential, schools, hospitals and the hospitality sector.

Arora added that Greenspan mall will be the first building to be taken.

REITs are reported to be the perfect option for home developers as both local and foreign investors will get the opportunity to invest in the lucrative real estate sector.

Provision of mortgages in the country is promising given the demographic trends in the Kenyan economy; a young and growing population, and rapid urbanization.

Insurance Times | Feb 2016

61

Energy and Minerals

Tanzania set to become key natural gas hub and exporter in Africa

By Staff writer

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T

he Tanzania Petroleum Development Corporation (TPDC) has announced that the country’s gas fields are large enough to cover domestic power requirements and make the country a natural gas hub in Africa.

Speaking during the launch of the Airborne Gravity Gradiometry Surveys (AGGS) for the Lake Tanganyika North Block at the Kilimanjaro International Airport (KIA), TPDC Managing Director Dr. James Mataragio said that the current gas fields had reached a production capacity of 260 million cubic feet per day (cf/d). The country’s needs are estimated at 140 million cf/d.

The surplus mainly comes from two sources: The Songo-Songo gas field has a production capacity of over 150 million cf/d yet the country can only consume 93 million cf/d from it, and Mnazi Bay has a capacity of 110 million cf/d, of which Tanzania can only use 47 million cf/d, said Dr. Mataragio.

Insurance Times | Feb 2016

According to the Wall Street Journal (WSJ), Tanzania plans to build a gas export plant to supply the needs of Asian markets.

The electricity sector has become non-dependent on oil imports and unreliable hydropower plants.

Currently, Tanzania can assure the generation of 500 MW of electricity; once the required gas power generators are completed, the country’s electricity sector will be fully self-reliant, Dr. Mataragio said. This will help the country to save up to $1 billion a year on oil imports for electricity generation, according to WSJ. Tanzania recently raised its natural gas reserves from 46.5 trillion cubic feet in June 2014 to 55 trillion cubic feet in June 2015 due to a series of discoveries in offshore blocks.

However, the country has potential natural gas reserves up to 441 trillion cubic feet in the coastal region, according to the US Geological Survey.

Transparency: Almanac now offers details of oil and gas industry

Retired Controller and Auditor General Ludovick Utouh speaks during the launch of the Tanzania Oil and Gas Almanac database.

By Staff writer

T

he Tanzania Oil and Gas Almanac database will be displayed in hard copy and on the Internet, in both Kiswahili and English languages.

Speaking at the launch of the firm’s portal, retired Controller and Auditor General Ludovick Utouh said the almanac will enhance transparency in the nascent oil and gas industry.

“The challenge is to spread the information to people in rural areas who can hardly access the Internet,” Utouh said. The almanac, according to FES Resident Director in Tanzania Rolf Paasch, will assist the country to promote transparency and accountability in the oil and gas sector.

“It has been created to significantly increase the stock of information available in local contexts among extractive stakeholders, including civil society organizations, governments, the media and international oil companies,” he said.

“Information included in the database has been drawn from publicly available sources. It was created using Media Wiki software, meaning that there will be an online database of all updated articles.”

The Chief Editor of the almanac, Abdallah Katunzi, said the portal will provide timely information for the general public, researchers, policy makers and the

media, among other stakeholders.

“There are about 16 countries in the world with such a database; lack of information on the extractive industry is among the challenges the country has been facing,” Katunzi said.

Katunzi, who is also a lecturer at the University of Dar es Salaam, said that a study conducted by the research organization Twaweza found out that 77 per cent of Tanzanians were not aware of discoveries of natural gas, thus the need for heightened awareness.

“It was found that three out of four Tanzanians had no idea of the existing natural gas policies. The almanac will provide information on all issues to do with the industry,” he said.

Twaweza Executive Director Aidan Eyakuze urged operators of the portal to provide information that can be easily interpreted by users. “It will play a crucial role for people to obtain information, but I urge those operating it to ensure they post useful and high quality data,” Eyakuze said.

Tanzania has so far discovered more than 55 trillion cubic feet of natural gas, and exploration is still underway both offshore and onshore. With the significant reserves at hand, the country is getting ready to join the global gas economy.

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63

Science and technology

Technological innovation puts Kenya miles ahead in Africa

By Staff Writer

T

echnological innovation has placed Kenya’s insurance sector ahead of most countries on the continent, giving the country a relatively higher penetration rate.

As of 2013, total premiums were just over $1.5 billion, having maintained an annual average growth rate of 15.5 per cent from 2005 to 2013.

According to a KPMG report, “Insurance Sector in Africa,” while some markets have slowed down more recently, Kenya has still continued to grow by 15.1 per cent in the period 2010-2013. In 2013, penetration rate reached 2.75 per cent, which represents a marked increase from 2.46 per cent in 2011.

KPMG, a global network of professional firms, says Kenyan insurance companies have a strong capacity for innovation.

“Indeed, in the most recent GCI,

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Insurance Times | Feb 2016

Kenya was ranked 133rd out of 144 countries globally, and first in Africa for companies’ innovative capacities,” said the report.

The trend seems to be particularly relevant in the insurance sector, where Kenyan companies were found to be more innovative than those in other African countries.

According to Business Monitor International (BMI), insurance companies can receive premiums through M-Pesa and Airtel Money – the two recent innovations which have contributed to increasing financial inclusion in Africa and other continents where it is adopted.

“An innovative product launched in 2009 was Kilimo Salama, whereby farmers can insure their investments such as fertilizer and seeds against severe weather conditions,” it says.

The latter project is a partnership between Syngenta Foundation for Sustainable Agriculture, UAP Insurance and the telecom opera-

tor Safaricom. It protects farmers against extreme drought and excessive rain – even for plots as small as one acre.

According to the report, payouts are based on how severe the insured event is, which is measured at the nearest weather stations. The weather stations are part of the reason to why the project is so innovative.

Weather stations are assisted by solar power and computerized gauges to enable sending out data on rainfall levels, sun and temperature every 15 minutes.

“Each farmer with insurance is linked to the nearest weather station, with nobody being further than 20 km away from a station,” says the study.

When an insurance company detects that the weather has been bad in a certain region, then all farmers linked to the weather station get a pay-out; no claim has to be filed.

It was noted that this arrangement saves costs for all sides, par-

ticularly the insurer.

The innovation has proved successful, thanks to access to mobile phones among Kenyans, who can use the facility to improve their farming.

Regarding contributions, rather than paying a premium directly to the insurance company, UAP, farmers pay a premium of about 5 per cent on their inputs when buying.

“Their stockists then register their insurance and the farmer gets a short message notification. Since most Kenyans have access to mobile phones, this system works well,” the report says.

Farmers whose farms are affected by weather conditions receive their pay-outs through mobile money, reducing costs for the insurance company. The innovation eliminated costs such as sending out experts to the farms to provide crop estimates, especially since farms

are small and farmers would not be able to afford extensive crop coverage.

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Science and technology

TTCL to launch 4G network for faster wireless connection

TTCL chief executive officer Dr Kamugisha Kazaura

Tanzania oldest and largest telecommunication company celebrated its Customer Service Week in 2015 with a promise to undertake a major technological revolution in order to cope with the changing environment.

By Staff Writer

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T

he week is celebrated every October, with firms recognizing the importance of customer service and the work of those who serve and support clients daily.

Among the areas of emphasis for the telecoms firm are the adoption of

Insurance Times | Feb 2016

a 4G network to enhance its wireless connection service, investment in voice service, and the launch of Internet Protocol Television (IPTV) service. This will be in addition to the current fixed data network.

The company’s Chief Sales and

Marketing Officer Peter Ngota said that there were ongoing preparations to deploy the 4G network by the end of this year. Testing of the IPTV will also be done in some regions like Mwanza, Mbeya, Zanzibar and Arusha before deploying it nationwide.

“We want to ensure our company becomes the best choice of people by offering services to meet their needs,” he said.

Celebrating the Customer Service Week was meant to involve the public in the company’s plans and get customer comments on services currently offered. The feedback, according to the company, will be used to improve its services.

According to TTCL chief executive officer, Dr. Kamugisha Kazaura, the plan is to retain the existing customers and attract new to the company’s data base which will be done

through offering quality services and designing good products.

“We will also emphasize on the importance of customer care so that our clients are satisfied after served,” said Dr. Kazaura.

He said there are some products in pipeline which the public need to be informed. These products include IPTV which offers opportunity for integration and convergence.

IPTV service will be among the attractive technology in the country when it is deployed countrywide given its ability to ease access to television. With IPTV technology, one will not need decoder or satellite dish.

Recently IPTV technology caught more attention at this year’s Dar es Salaam International Trade Fair (DITF) where visitors of the TTCL pavilion expressed their wish to own the technology once it is ready.

Mr Ngota believes that a stateowned telecom company has done a lot with regards to institutions and corporate and it is looking to revolutionaries other areas like new satellite technology for local access, wireless connection and web portal for online service provision.

“For long we have been offering fixed data network, but we are planning to deploy wireless internet through the 4G network,” he said.

According to him, a lot have been done with regard to data service both Tanzania and in some neighboring countries.

In Tanzania, the state-owned telecom firm has connected about 160 local government offices to ease online payment, connected financial institutions and recently it enabled Medical Store Department (MSD) to enable e-distribution of medicines.

Insurance Times | Feb 2016

67

Agricultural insurance

Rwanda’s ‘risky’ farming finds it hard to attract insurers

A climbing bean farmer tends to her young crop in Nyagatare, in Rwanda’s Eastern Province.

Photo: Neil Palmer/CIAT

By Staff Writer Agriculture is still considered a risky sector by the financial industry, a situation that has affected its growth. From commercial banks to microfinance institutions and the insurance sector, most players want nothing to do with agriculture. This is despite the fact that this sector employs about 76 per cent of the Rwandan population and is one of the top drivers of economic growth.

However, most farming activities in the country are carried out on a small scale and are subsistent in nature. This seems to be one of the reasons the sector is shunned by the financial sector, especially insurers.

According to the central bank, the nature of farming is largely to blame for this lack of interest from financial institutions, especially considering that few farmers use modern farming practices.

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Insurance Times | Feb 2016

According to John Rwangombwa, the Governor of the National Bank of Rwanda, agriculture remains predominantly traditional, making it difficult for insurers to invest in the sector.

The regulator notes that the agro-industry risk is still too high to predict or for one to be able to make informed decisions. The sector also depends largely on nature for its survival.

“Therefore, it is important for policy-makers, farmers and other stakeholders to de-risk the sector for it to attract investments and other forms of support.

“Hopefully, with the Ministry of Agriculture promoting modern farming methods and practices, insurance companies and other financial institutions will take interest and invest in the sector,” Rwangombwa

said.

The Governor was presenting the bank’s monetary policy and financial stability statement in Kigali on Thursday.

However, some experts differ, arguing that the financial sector should not sit back, hoping that somehow things will get better.

Dr Livingstone Byamungu, the Linking Farmers to Markets (LIFAM) national co-ordinator, believes the growth of the agriculture sector will largely depend on the interventions of financial institutions in the sector.

He said the laidback approach by financial institutions had condemned farmers to challenges that have made their enterprises almost unsustainable.

Byamungu said access to financial services, like insurance and loans, could augment the sector’s productivity and help improve the value chain, thus creating more jobs and boosting economic growth.

Loans to the agriculture sector amount to only 4 per cent of the total loans disbursed by banks.

Many farmers say that banks deny them credit without concrete reasons, while the insurance industry has almost steered clear of the sector save for a few insurers, including UAP and SORAS. Though the insurance sector’s total assets increased by about 19 per cent, from Rwf247 billion in December 2014 to Rwf295 billion in June 2015, this has not been reflected in the support given to the agriculture industry.

“It is difficult because banks will not give you money unless you have collateral. Insurance companies are also still reluctant to cover farming activities, claiming that the sector involves a lot of risks,” Anastaze Minani, the president of Dukundekawa-Musasa Coffee Co-operative, said.

The Ministry of Agriculture and Animal Resources is developing a crop insurance scheme for smallscale farmers. The “all out” plan, according to Innocent Musabyimana, the Permanent Secretary at the ministry, will benefit more than 105,000 farmers, who will be given micro-cover using farm produce.

Although the permanent secretary did not reveal details of the scheme and when it will start, he said the ministry is currently working with some local insurance companies to achieve the objective.

“We believe the scheme will further help reduce risks the sector faces by, for instance, addressing the challenges of climate change, and thus attract more insurers to support farmers,” Musabyimana said. He added that they also plan to attract regional insurance industry players to support the sector.

Regional insurance companies like UAP have already launched three insurance products targeting both livestock and crops farmers. The firm is providing cover for crops like wheat, maize, barley, rice, tea crop, coffee, sugarcane, tobacco, horticulture and flowers. The livestock cover targets dairy and beef cattle, poultry, pigs, sheep and goats.

It is, therefore, envisaged that attracting more insurers into the sector will help increase productivity.

Already, farmers under the Agriculture and Climate Risk Enterprise (ACRE) scheme, a programme launched by the Syngenta Foundation in June, last year, and supported by local insurers, SORAS, say the project has helped them engage in commercial farming in a more sustainable manner.

However, the project faces huge barriers, including access to reliable data on which to base agricultural insurance indices that could help players develop the right products for farmers.

According to Dr Blaise Uhagaze, the secretary general of the Association of Rwanda Insurers, farmers need to co-operate with insurers.

Meanwhile, there is still little understanding of insurance products by farmers.“There is need to first of all sensitize farmers on how insurance works and its benefits,” Uhagaze said.

“However, market players need to be more innovative and come up with products that best suit farmers,” he added.

Rwanda’s insurance penetration rate is about 3 per cent.

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Tours and Travel

Tourism now contributing to 25pc of Dar coffers

By Staff Writer

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Insurance Times | Feb 2016

Hyatt Regency Dar es Salaam, The Kilimanjaro, Inset, from left; A sandy beach, Coral reef, and an elephant in the wild.

T

he Tanzanian tourism sector is now generating a quarter of the country’s foreign exchange earnings, thus playing a significant role in the economy.

According to the country’s Permanent Secretary in the Ministry of Tourism and Natural Resources, Dr. Adelhelm Meru, in 2014 tourism generated $2 billion, which

constituted 25 per cent of Tanzania’s foreign exchange earnings. The industry represented 17 per cent of Tanzania’s GDP. It also directly employs around 600,000 people, another 2 million people indirectly.

Tanzania among the countries with rich wildlife; this is in addition to six

world heritage sites and some of the most exotic beaches in the world.

Tanzania’s wildlife resources include the world-famous Serengeti plains, which host the largest terrestrial mammal migration in the world. The Ngorongoro Crater is the world’s largest intact volcanic caldera, Mt. Kilimanjaro, Africa’s highest, is also found in the country. It is also home to the highest density of large game in Africa.

Tanzania received a record 1.1 million international visitors in 2014, mostly from Europe, the US and Africa, compared with 582,807 in 2004. This shows an increase of around 10 per cent per annum.

This is also the result of government strategies and policies that have been introduced in the past 20 years to improve and develop the country’s tourism sector, establish it as a prime safari and beach destination in Africa, and raise the sector’s contribution to the country’s economy.

According to the World Travel and Tourism Council (WTTC), the direct contribution of travel and tourism to the Tanzanian GDP was Tsh2,975.6 billion, or 5.1 per cent of total GDP, in 2014 ($1.4 billion).

During the same period, the total contribution was Tsh8,252.7 billion, or 14 per cent of Tanzania’s GDP $3.9 billion).

Travel and tourism directly supported 467,000 jobs or 4.3 per cent of total employment in Tanzania, and 12.2 per cent of total employment with 1,337,000 jobs.

Tanzania currently ranks in the 109th position in the world in terms of travel and tourism competitiveness, with a score of 3.46. Switzerland tops the list with a score of 5.66, according to WTTC. In the Sub-Saharan region, Tanzania ranks 12th, with Seychelles leading the group with a mark of 4.51.

Tanzania also ranks 82nd out of 184 countries in terms of travel and tourism sector size, according to WTTC. It ranks ninth in terms of the sector’s long-term growth.

By 2025, Tanzania’s tourism sector is expected to grow at a rate of 6.2 per cent per annum, against an expected world average growth of 3.7 per cent, according to WTTC.

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Ideas of Dr. Saqware

Why compensation of accident victims remains a challenge

I recognize that third party insurance compensation poses one of the challenges facing the social welfare system in Tanzania, and a solution is needed within the context of motor vehicle third-party insurance.

Dr. Baghayo Saqware.

A

ccording to the National Council of Road Safety and Security Report of 2005, motor vehicle accidents have become a serious economic and social problem in Tanzania. The waste of human and material resources caused by the resulting deaths, bodily injuries and damage to properties has for long been a matter of concern to the government. This is particularly so not only because financial resources are diverted away from more productive purposes, but members of the public live in fear of being killed, maimed or suffering property damage with no certainty of compensation.

In Tanzania, it is very difficult to obtain data on accident casualties and accident severity by vehicle types nationally (in fact, even basic vehicle fleet statistics prove impossible to obtain). Generally, the Traffic Police do not analyse data from regions by vehicle type, although this is possible from monthly accident report forms. In addition, compilation and collation of such data by regional traffic police is usually incomplete.

However, deaths, injuries and property loss with severe financial and social implications on those involved in/or affected by traffic accidents are a cause of great concern throughout the world. Tanzania is by no means an exception. The public outcry in Tanzania for government measures to stop the road carnage is thus understandable.

Motor accidents are categorized as fatal accidents that kill or injure people. Table 1 shows accidents by type from 2006

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to 2009 as reported by the Tanzania police force. This data reveals that there has been an increase in the number of people who lost their lives, and/or were injured in road accidents from 2006 to 2009.os%R Table 1: Road traffic accidents by type (2006-2009) in Tanzania Type of Accident

2006

2007

2008

2009

Total No. of Traffic Accident

18,187

25,151

17,451

22,019

Fatal Accident

3,028

3,065

2,460

2,872

Killed Persons

2,657

3,071

2,840

3,851

Injured Persons

16,456

16,090

16,119

20,717

Source: Tanzania Police Force (2009)

Reports by the Surface and Marine Transport Regulatory Authority (SUMATRA) for 2009 show that road accidents cost the economy at least 3.4 per cent of the gross domestic product. In this report, SUMATRA investigated the social and economic impact that road traffic accidents have on accident victims and their families and on the health sector. The study estimates the total economic loss due to the reported 2,838 fatalities, more than 15,855 personal injuries and damaged

Challenges within the current system The main challenge within the present state of the law concerning third-party victims of motor vehicle road accidents, vide Cap. 169, is that a number of categories of such victims are excluded from Compulsory Third-party Liability Cover.

Among several categories of excluded potential victims of motor vehicle accidents are those of: Uninsured motor vehicles, including motor vehicles whose insurance has expired or has been cancelled for breach of the duty of utmost good faith prior to the accident or claim in issue; Insured motor vehicles driven at the material time (of the accident) by an unauthorized driver such as a thief or turn-boy; Insured vehicles found not to have been roadworthy at the material time; Hit-and-run drivers who or whose vehicle or its owner cannot, therefore, be found/identified and sued; Passengers being carried gratuitously in a vehicle normally used for hire or reward, in a domestic (non-commercial vehicle), carried in the course of or by reason of their employment; Persons who are unable to prove negligence of the driver as the proximate cause of their injury or of the death of a deceased relative.

motor vehicles was Tsh508 billion (equivalent to $446 million), or 3.4 per cent of the GDP. This estimate means that the cost for the country is significant and justifies considerable investment in road safety programmes or measures to reduce the economic drain and negative social impact on road traffic accident victims and their families.

There are different types of motor accidents caused by different factors. Table 2 shows the distribution of road accidents by cause from 2007 to 2010. Dangerous driving is the leading cause, followed by bad roads, defective motor vehicles, excessive speed and careless pedestrians.

Table 2: Motor Accidents by Cause Cause of Accident

2007

2008

2009

2010

Reckless dangerous drivers

9,366

8,778

5,918

8,170

Defective motor vehicles

2,403

3,242

2,713

1,886

Careless pedestrians

1,337

2,250

438

840

Excessive speed

1,409

710

1,579

1,243

Careless motor cyclists

757

644

811

754

Careless pedal cyclists

607

530

1,191

1,064

Intoxication

171

102

207

320

Others (bad or slippery roads, etc.

989

1,350

4,820

3,425

Recommendations: This writer recognizes that third party insurance compensation poses one of the challenges facing the social welfare system in Tanzania, and a solution is needed within the context of motor vehicle third-party insurance. A meaningful modernization of the Motor Vehicle Third-party Injury compensation legislation would require revamping the whole current legal and institutional framework in line with developments in the social security sector. This would necessitate spending more resources and undertaking further studies on major changes in the existing system, as experience in other countries with similar provisions has shown.

Note: Readers are advised to visit the African Journal of Finance and Management for an indepth analysis of this article

Source: Traffic Police, Dar es Salaam

To advertise, call Tel: +255 22 2184624 Dar es Salaam, Tanzania Published by Zurich Group Ltd

Insurance Times | Feb 2016

73

Fashion

‘I want to help young girls who don’t know where to begin’

K

enya is blessed with many youths who are richly talented but do not know where to start My name is Irene Wangui Kabithi.

Modelling is my passion – and I am aiming high.

Right now, I am planning to participate in runway competitions across the country such as Miss Kenya, Miss Tourism, Miss Kajiado County and Miss Kiambu County.

It doesn’t matter that I only began modelling as a career this year: The journey has simply been ecstatic. I have already participated in several photo shoots with Faces Talent Agency and Azzuri Agency, where I am a member. I have also advertised several designs.

As a student at the Jomo Kenyatta University of Agriculture and Technology, I participated in the Miss JKUAT competitions. I am also aiming for the Miss Star Africa crown. Through these competitions, I will get a platform to help young girls who want to join the industry do not know where to begin for fear of exploitation.

Modelling has consumed my mind ever since I was 10 years old – a dream I have always wanted to pursue. My mother didn’t like it much, but nobody could dissuade me from watching programmes aired on televi-

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Insurance Times | Feb 2016

sion featuring models. I particularly loved America’s Next Top Model hosted by Tyra Banks, which gave me an idea of the industry.

My first time to walk on the runway was in 2010 in high school. We called it the Miss Isinya competition, where I became runners up. My parents have always been supportive of my academic career and promised that they would support me in any path I chose after graduating with my diploma in 2013.

Today, I am in my third year of studies for a bachelor’s degree in Mass Communication. Apart from my studies and young career in modelling, I am also an actress and part-time journalist. I also love swimming, playing darts and going for morning jogs. In the process of undertaking all these activities, I make lot of new friends, whom I love and cherish.

My biggest dream is to start my own Talents Company, since I believe Kenya is blessed with many youths who are richly talented but do not know where to start. I would like to instil courage in people who have lost hope in pursuing their talents, since I hold that any vision can be achieved.

In the final analysis, success is about the number of lives one touches.

Insurance Times | Feb 2016

75

Entertainment

Star Wars: ‘The Force Awakens’

Breaks all time Box office Records

By Joseph Ngari

I

t has been dubbed the biggest film of 2015. Now, Star Wars: The Force Awakens continues to dominate movie industry talk right into the heart of the awards season, smashing records in Box Office history.

A term used to describe the amount of business generated by ticket sales in the movie industry, the Box Office is the ultimate evaluation point, where the film industry rates a film’s financial success.

The Force Awakens has smashed a staggering 41 record categories in the All Time Records, according to movie rating website, Box Office Mojo. These include: The domestic market at $861,334,016, (worldwide record is held by Avatar at $2,787,965,087) and highest opening weekend, both domestic and worldwide, at $247,966,675 and $528,966,675, respectively.

Others include highest Christmas Day gross at $49,325,663 and New Year’s Day gross at $34,394,152. The closest any other film has come to this is The Twilight Saga: Eclipse (eight records).

Disney got every theatre that wanted to run the film into committing to a fiveweek exclusive run, according to Collider, a YouTube movie talk channel. The alltime record could pile up by the end of the run and subsequently, the end of the film award season in February.

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Insurance Times | Feb 2016

Student’s corner

How insurance companies can benefit the penniless Most people in Second and Third World countries, including ours, take insurance companies for granted. In fact, some people are not even aware of them, how they work and of what benefit they can be to them.

M

ost of those with insurance cover are either employed by the government or well-known companies. The rest of the people, such as small businesspersons and the underprivileged, have not benefited because most people feel that insurance is for the rich. But is this really true?

I believe one of the reasons for the establishment of these companies is to improve livelihoods. No one can tell what may happen the next minute. We all live like birds out of a nest – anything can happen.

Just as the rich need insurance, so do the poor. In fact, the underprivileged need insurance the most. But they must first be helped: Giving life insurance to street people may not be of great help because the first thing they need is to get out of the streets. Some of them may not know this, because they have got used to that life.

The government should start by helping such people too to be insured through its own social securities. This method has been applied in the United States and it has done wonders .It doesn’t mean that these people will not work at all. They can be given simple jobs like sweeping and cleaning public places for a start .By the government, with the help of charitable organizations, can contribute towards insure this people.

The insurance companies, too, have a big role to play. When doing public awareness campaigns, they can come up

with projects to visit street kids and other underprivileged persons. My dad used to tell me that the best gift one can give to those he loves is one’s time.

When people just hand out money to the penniless, it doesn’t help much, or even at all. That money could be used for buying drugs. But by visiting them, spending time with them and giving food, insurance companies will not only be helping those people but also changing the public’s view of insurance firms. This is because many people view insurance companies as out to collect money from people.

Negative perceptions of insurance will need to change. Firms can invite the public to be part of their outreach occasions, say voluntary mentors for the street kids.

The mentors won’t have to pay a coin.

The insurance companies can also sponsor some of the street children. The government, too, can come up with affirmative laws to compel companies to sponsor disadvantaged persons. There are many countries with such laws. The street kids, beggars and other underprivileged people suffer a lot, especially when it rains at night and they have no shelter.

Ochieng Ogutu Ogutu Ochieng is an article and book writer, researcher and English language student at Dixie State University, St George, Utah, USA. He is currently doing research in Tanzania for his upcoming book, The Traveler.

Insurance Times | Feb 2016

77

Sports

Soccer wizard: Samatta does Tanzania proud

Mbwana Aly Samatta (second from left )receiving his award for the African Player of the Year based in Africa during the event in Abuja, Nigeria, on 7 January, 2016.

Bus, President John Pombe Magufuli has congratulated the Tanzanian striker and TP Mazembe club soccer player, Mbwana Samatta, who won the prize of African Player of the Year Based in Africa for 2015.

By Jovina Bujulu

78

T

he president said the victory brought honour to him, footballers in the country and the nation at large. Mbwana is the first player from East Africa to be crowned the CAF African Player of the Year based on the continent.

According to a State House statement, the president said he was proud of the 24-year-old striker’s success and advised other football players and stake-

Insurance Times | Feb 2016

holders of the game in the country to put more effort for the sport to develop to a better stage internationally.

“I would like the Minister for Information, Culture, Arts and Sports, Nape Nnauye, to send my congratulatory message to Samatta for winning the award,” read part of the statement.

The Tanzanian scored seven goals to emerge top and help the DR Congo club win the continental title,

which earned them a ticket to feature in the World Club competition in Japan recently.

The tournament brought together the cream in world club football, among them Spain’s Barcelona. For the Africa-Based Player of the Year category, Algeria and Etoile du Sahel’s Baghdad Bounedjah, TP Mazembe’s duo of Samatta and DR Congo’s goalkeeper Robert Kidiaba had gone hammer and tongs at the top prize.

The winners were decided by votes of the Coaches or Technical Directors of the National Associations affiliated to the Confederation of African Football.

Samatta has put Tanzania on the world map of soccer, with wire services struggling with his nationality.

One of the first wire services to run the story was NBC Sports, which put Samata’s nationality as Tunisian. Others that followed put him as hailing from Botswana and the Democratic Republic of Congo (DRC).

While foreign journalists tried in earnest to make head or tail of his nationality, social media platforms like Facebook and Twitter were awash with comments and praise for what the 24-year-old football player had achieved.

In his Twitter post, Samata thanked God for the success; he also took time to thank his father, family and friends for their support and prayers.

On his Facebook page, Bongo Flava crooner Diamond Platnumz paid tribute to the footballer, describing him as a hero.

Renowned politician Zitto Kabwe twitted that Tanzania was back on Africa’s first 11, citing that the last Tanzanian to appear in the list was Maulid Dilunga in the 1970s.

“Thank you my younger brother for giving us this respectful honour,” he wrote in his post. Samatta’s Taifa Stars teammate and fellow professional who plays in South Africa, Mrisho Ngassa, showered Samata with praise in a tweet, saying that the achievement was no small feat. It was the dream of every professional player on the continent to win the trophy, he said.

Tanzania’s Member of the East African Legislative Assembly (EALA), ShyRose Bhanji, also joined thousands of other football enthusiasts to wish Samata well.

Mbwana Aly Samatta (left ) in action

Insurance Times | Feb 2016

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