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‘25PC OF ALL MONEY IN BANKS IS DUE TO INSURANCE’

ITM: What are the major roles and objectives of TIRA in Tanzania’s insurance industry? Kamuzora: The major role and responsibility of TIRA – like any other regulator – is to set and enforce standards, in this case in the insurance industry. It is a government agency that is charged with ensuring that all those who are playing insurance are doing it on the same rules and regulations. In other words, its work is to set the ground level so that everyone who comes to do insurance business – be it an insurer, broker, or agent – does that using the same standards, conditions, terms as well as expectations. The government has given us powers under the Insurance Act No. 10 of 2009 and charged us with that responsibility. The main objective of an insurance regulator in any market in the world is to protect the policy holders, who are the consumers of insurance. Because insurance

ITM: The introduction of bancassurance has seen banks setting foot in the insurance business. How does TIRA regulate this in relation to other intermediaries in the insurance business?

Kamuzora: Bancassurance takes many forms. One form is for the bank to operate as an agent, another form is for the bank to form a subsidiary of its company with its name, and another form is for the bank to save the products of an insurance company in its own name – like somebody starting a CRDB Motel Insurance Company, which would mean that behind the CRDB there is an insurance company. We want banks to open subsidiary insurance companies and sell insurance products in their own names, and that is when you can say that you have bancassurance at its best. That will help penetration of the insurance industry in this country. We are about to fnalize arrangements with the Bank of Tanzania, which is the regulator of banks, to get banks to enter phase two and phase three so that bancassurance can now become an industry to be reckoned with. ITM: Takaful insurance is very important to the development of insurance in Tanzania. When do you think this business will start?

Kamuzora: For you to start a Takaful insurance, you need to have an appropriate legal and regulatory framework in place. I don’t buy the idea of someone coming in and saying, ‘We are selling Islamic insurance products,’ but there is no law. For insurance to sell as an Islamic product, it has to be backed by Sharia law. Now, how many of us are good scholars of Sharia? You need to have a Sharia auditor when you are running a Sharia business. The accounting system of Islamic fnance must be according to international Islamic accounting standards, so you must have accountants who can prepare your fnancial statement using Sharia law. That is why we have to frst work on the law before we can allow people to engage in Takaful business. This is being fnalized and we should be able to have it in the next few months. ITM: The recent MoU signed between the Tanzania Insurance Brokers Association (TIBA) and the Institute of Finance Management (IFM) goes a long way to train and empower our graduates. What is the regulator doing to enhance this kind of manpower development?

Kamuzora: The regulator has done and still does a lot in making sure that we have the appropriate manpower in the market. Ten years ago, we signed an MoU between this offce and the University of Dar es Salaam (UDSM) to introduce a degree course in science. Every year, more than 25 students graduate with a bachelor’s degree in actuarial science. We also work with IFM to make sure that they conduct courses leading to an award of Certifcate of Profciency in Insurance, a basic requirement for anyone who wants to do insurance agency business in this country. We also sit on various boards of IFM to make sure that it produces people with diploma as well as degree qualifcations in insurance. All this is part of our efforts to make sure that people who are in the insurance business and those who want to come into this market are qualifed. The MoU signed between brokers and IFM is a very welcome move. Brokers will be able to identify talented students and get them to work in their companies. ITM: How has TIRA benefted from local experts in insurance from IFM and UDSM? To what extent does TIRA utilize and engage them in various insurance projects? Kamuzora: TIRA does not create jobs in the sense that we tell people to come and work for us. We create jobs by licensing companies that then employ people. Our role is to make sure that the companies that are coming into the market are not briefcase companies; they are companies that are here to stay, grow, open branches and employ Tanzanians. The 30 insurance companies operating here all have branches in Dar es Salaam, Arusha, Zanzibar, Mbeya, Moshi, Mwanza and Dodoma. So, they have employed the products of IFM and the University of Dar es Salaam. ITM: There are a number of experts from other countries. Are they adding value to the industry?

Kamuzora: Insurance is an international business. You cannot domesticate insurance, because a car will leave here and be driven across the border to Kenya, Uganda and back to Tanzania. The trucks that are carrying our cargo from the port of Dar es Salaam drive their way to Zambia, Malawi and Congo. International business works well when you allow foreigners to work in the country; you don’t look at somebody’s citizenship orpersonality to employ him/her, you look at his capacity to deliver. In the aviation industry, there are pilots fying the Precision Air who are not Tanzanians, and that is a nice thing. It is the same in the hotel industry as well as banking. So, we cannot close doors for foreigners, but we can put limits for jobs that do not require foreigners. ITM: We have seen foreign investors storm the insurance industry in the country. What does the regulator do to protect the investors and promote locally-owned insurance companies?

Kamuzora: The law that establishes the insurance industry in Tanzania has favoured Tanzanians in many ways. You cannot establish an insurance company or a broking frm in this country unless one-third of the shareholding is held by a Tanzanian. So, these companies, however big and wherever they may be coming from, cannot come and set up a shop here without signing off a third of the shareholding to Tanzanians. ITM: Tanzania has a very low portfolio on the life assurance business. Why?

Kamuzora: Life insurance business, where it is selling well in any country, is because of the following features. The stability of the national currency. In countries that have been stable against fuctuation, life insurance sells well. Culture of the population. Life insurance can either sell as a saving or as an investment. Tanzanians have a poor culture of saving compared to people in India, Japan and Kenya. The mortgage industry is established. If the system of mortgage industry is well established, people will take insurance because the condition for you to be given a loan is that you need to insure your life until death. ITM: Value added tax (VAT) was imposed by the government on insurance services last year. What is your take on this?

Kamuzora: It is good, because insurance will also contribute to the economy of our country. We need this country to be rich. So, VAT is a vehicle for helping the government to collect as much as possible. Actually, one function of insurance is to collect and mobilize funds for investment by the government. The government will then invest in building roads, schools, and hospitals. Insurance is bought by people who have extra to spend; poor people do not buy insurance. People don’t buy insurance because it is cheap; people buy insurance because they believe in it. Insurance is about rearranging of priorities. In fact, the richest people are the ones who are not buying insurance. ITM: Insurance Times Magazine has been established to bring greater awareness of insurance services and give the insurance industry a voice. TIBA has shown its support for the magazine by adopting it as an offcial tool for information dissemination. As the only insurance publication in the region, what can we expect from TIRA?

Kamuzora: I wish to see more magazines writing about insurance, because insurance education and awareness is lacking in this part of the world. So, I congratulate you for taking the initiative. I have, too, seen the need to create a platform where people who want to know more about insurance can get that information. But again, insurance is very tricky business. You have to be very careful when you write about insurance, because some people may mislead you with information. You can always check with my offce for us to be able to validate the information you get. People need to know about insurance, and insurance always impacts all aspects of our lives. ITM: We have not seen any offenders published in the papers. Does this mean that all issues are resolved amicably with no recourse to courts of law?

Kamuzora: We have many cases in the courts, and they are not reported in the papers and I don’t know why. There are many ways of dealing with insurance offenders. One way is safe regulation: Those who are members of associations can have the association penalize them. They take measures and issue penalties. Those that we deal with, we also penalize them. We cancel their licences and give them warnings. There are those that we take to police, and they end up in court. Some get fned, others jailed. We can be giving you this information to publish. ITM: Tanzania has only one reinsurer. Compared to other countries in the region, why is this so?

Kamuzora: It is so because our reinsurer is a national insurer getting business by law. When the market was liberalized in 1997, we realized that we needed to build the reinsurance capacity, which we did not have. So, the government deliberately shut out reinsurers so as to establish its national capacity for some time. After it has built this capacity, it will allow other reinsurers to come into the market. However, they take business even if they don’t open offces; for instance, Tanzania Reinsurance does not take aviation risks because it does not have that capacity. So, all aviation policies are underwritten in London, where they are taken up by reinsurers based in London or elsewhere. We will undertake some studies to see if time has come to allow others who want to open up shop to do so.

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