The ideal situation is that growth in insurance coverage should not lag too far behind economic growth. Commissioner of Insurance and Chief Executive Officer of the Tanzania Insurance Regulatory Authority (TIRA), Mr Israel Kamuzora, said low level of penetration and awareness of insurance is attributed to both cultural and historical factors. Despite the fact that insurance industry has been growing at a healthy rate of over 20 per cent annually for over a decade, its penetration level is just 1 per cent of the country’s GDP against the world average of 2.3 per cent. In 2014, GDP registered seven per cent growth implying that incomes are rising therefore individuals and corporate will increasingly seek insurance to protect their expanding income base. The growth and penetration of the insurance sector should have subsequently mirrored the expansion of the GDP. The wide lag between our GDP growth and insurance reach subsequently means that there are vast opportunities for growth of exposures and income in the insurance sector in Tanzania. The majority of insurance products in the country 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 corporate are an important business segment in growing revenues, the rising population requiring life, health and other general insurance products provides additional opportunities for growth in the industry. “Most of our societies understand the need to transfer cost from an individual to the whole community but they accept to do this only after the catastrophic event has already occurred, not earlier and certainly not for a fee; it is entirely voluntary,” he said. Making contributions is the panacea for every tragedy, every socio-economic challenge. Medical bills are a classic example. People raise money for medical bills after the person dies in hospital, not before. The system is inherently expensive, very inefficient and leaves those involved traumatized. The notion that people can contribute before the tragic event happens is alien to most of the societies but the insurance industry needs to invest heavily to that form of civic education. Societies, on the other hand, are created from cultural framework because culture is man-made creation which informs the coming together of individuals in order to make a society. Many individuals in Tanzania and indeed in the African continent have suffered from damage to the environment or loss of resources caused by natural and man-made disasters. Catastrophes around the continent including drought, increases vulnerability of many countries and their population. Risk occurrence is a phenomenon that affects human lives. Risk avoidance helps individuals to cope with the tragedies of life. For example, farming in developing countries is exposed to a variety of income uncertainties ranging from fluctuation of prices and unpredictable weather patterns, thus holding back efforts to lift people out of poverty. It is well known that such uncertainties induce substantial income risks, and these can be detrimental to small or poor producers in developing countries. Such uncertainties have been blocking about 80 per cent of the population depending on farming from accessing lending houses. But agriculture sector will register notable progress when the proposed agriculture insurance that will provide solution to number of uncertainties becomes a reality. The absence of crop production credit is a bottleneck to access and adoption of improved farming technology, certified seeds, fertilizers and plant protection chemicals. Agriculture insurance has shown to be a way of increasing small farmers’ access to seasonal loans in many countries and may have similar role to play in the country. “Crop and agriculture insurance is fundamental to the national economies as adverse weather events like drought, floods and storms that cause heavy losses to farmers pose major threat to production and reduced farmers’ incomes,” he said. The insurance industry needs to take a long hard look at new technologies to see how they could help change cultural mindsets, raise the fear of risks, and facilitate transfer of risks, institute insurance contracts, premium payment and claims settlement. The protection component, the risk taking business, may be hard sell Tanzanians. However, beyond these innovations more needs to be done. The insurance industry has no excuse either for not securing significant funds from those who are keen on savings accounts. Source - dailynews.co.tz