Challenges facing the success of insurance services provision in Tanzania

Abstract

Insurance is an intangible service. It is a promise to provide for financial losses to individuals and companies upon payment of an annual premium as the consideration and are compensated once any insured perils operate. The loss has to be unforeseen and accidental. This study looks at the challenges facing the insurance services provision in Tanzania. The study was conducted on the insurance companies registered and licenced by the Tanzania Insurances Regulatory Authority as at 31st July 2012. Data was collected using questionnaires which were hand delivered to insurance companies targeting business development executives in self addressed envelopes. Some questionnaires were emailed to the officers in the different companies to the convenient of the respondents. The results were analysed using descriptive cross sectional design as well as co-relational research due to the qualitative nature of the data. The key findings from the study shows that insurance services provision in Tanzania face myriad of challenges that are inhibiting advancement. Due to these challenges the industry continues to register low penetration at as many people remain uninsured. Many challenges have been outlined in the study need to be addressed by the stake holders if the industry is to achieve a penetration increase from its current 0.84%. The challenges include awareness, immature legal framework, lack of strong market –led initiative, claims fraud and corruption, under- capitalization, legal constraint to new channels of distribution such as banc assurance, weak supervision and lack of vocational training facilities leading to shortage in skills needed in the industry. The findings of this study are important because they will assist in developing policies that will ensure that insurance is embraced in Tanzania. This includes introducing favorable strategies that will result in increased adoption of insurance. In addition it will help the government and other stakeholders will recognize their role so that it can support the industry.