General Manager, AAR Insurance
Managing Director, National Insurance Corporation Tanzania (NIC)
Violet Mordichai For the past few years Tanzania has shown tremendous improvement in health insurance coverage. Pledging to achieve a “universal health system,” the government and other key stakeholders have demonstrated a growing commitment toward the expansion of medical insurance among the Tanzanian population. Yet, despite the collective efforts of public and private health insurance companies, only 23% of the total population has been covered, the equivalent of some 11.5 million, while 33% of total healthcare expenditure comes from out-of-pocket payments. It is evident that wealthier and middle-income people are likely benefiting more than the rest, leaving the lower-income and poorer population behind. Indeed, there is a need to develop low-cost health insurance schemes and microinsurance plans to help expand coverage to a larger population. Healthcare costs are quite high in comparison with the average Tanzanian’s purchasing power, meaning the market has been small and difficult to capture. However, we are trying to be innovative, specifically in terms of penetrating the microinsurance industry and the informally employed by bringing in products that target these people. The past year has been a difficult one, and employers are looking for more affordable products that fit their budgets. In the face of this situation, the game changer for us is innovation and improving our distribution channels.
Sam Kamanga NIC is close to launching its first microinsurance product, something we expect to happen in 3Q2017. We sought to ensure these hit the market before July 2017, because we want to take advantage of the national trade fair being held in Dar es Salaam that month. We decided to look at the transportation sector, since the majority of Tanzanians travel around the country using buses, and there are many accidents. Our new product relates to this and is intended to help people benefit from insurance, as the biggest issue facing the Tanzanian insurance sector is creating public awareness. People think insurance is only about insuring their car, because in Tanzania motor insurance is mandatory. We want to extend our insurance services to a level where people understand the importance of other types of insurance. Because of this, we are pioneering something new that will be the first of its kind in the market here.
VM Universal coverage is a good thing, and everyone wants it. Financial inclusion in terms of insurance products will be wider as a whole, which will be a positive development for the industry. However, private medical insurers must be well prepared to complement this agenda through government support. In preparation for this good cause, AAR has made good progress in partnering with government projects and seeing how we can best contribute on this front, considering our regional presence and international partners. There is definitely a greater opportunity for private health insurance companies to support this government initiative toward universal health coverage.
SK First, we need to amend our regulations according to the updates in the market. In the last five years, Tanzania has been one of the fastest-growing economies, and there are many opportunities out there. The country’s regulations, therefore, need to be adjusted to fit with the current economic reality. Secondly, I am not opposed to a capital requirement increase; however, it is not always the best approach to simply eliminate competition because then the market will not grow to its full potential. In the coming years, I predict mergers and acquisitions. It does not make sense to have numerous small companies with small amounts of capital working on their own; rather, the entire market benefits from larger, more consolidated companies that have capability and stability. We need to increase awareness in the business community because in this part of the world most businesses start out as family-owned entities or individuals. People often want to maintain that structure. However, that model is not healthy in the long term. In developed countries, we have seen mergers, acquisitions, strategic partnerships, and PPPs. If we adapt and focus on these things here, we will do justice to the insurance sector and country.