Challenges and effects of liberalization of the insurance industry in Tanzania: Law and practice

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University of Dar es Salaam
For about three decades starting from 1967, insurance business was under the virtual monopoly of the two state owned Corporations, namely, the National Insurance Corporation of Tanzania Limited (N.I.C.) and the Zanzibar Insurance Corporation Limited (Z.l.C) In 1996, following the enactment of the Insurance Act in that year, insurance business was liberalized thereby opening the doors into the local market for private insurance practitioners. This paper is a study of the challenges and effects brought about by liberalization on the insurance industry. Towards this end, firstly, a brief historical background to insurance business in Tanzania is rendered. This reveals that prior to 1967, insurance business was conducted on the basis of free-market conditions. But from 1967, following the Arusha Declaration, insurance business was nationalized . But due to the social and economic changes that have been taking place the world over, the business had to be liberalised. This culminated into the enactment of the Insurance Act, 1996 and the making of the Insurance Regulations, 1998. It is also revealed in this study that among the effects of liberalisation has been the setting up of a regulatory framework that is designed to suit the socio-economic needs of the country. A comparative analysis of the regulatory mechanisms in other countries, both developed and developing ones, is made. Challenges facing the local regulatory authority in achieving the goals perceived in liberalisation are also pointed out. Challenges and effects of liberalisation on insurance companies, brokers and agents are also discussed. Among the effects has been the setting up of registration and capital requirements for these practitioners. To meet these requirements has been a big challenge to the practitioners. Other challenges include the need for effective customer care, professionalism and staff training. The study finds that the policy and the legal framework are satisfactorily founded to accommodate the changes brought about by liberalisation in the insurance industry. However, there have been some problems in their implementation. Delay in the establishment of the long awaited and vitally important National Reinsurance Corporation is one of the examples. There have also been some problems in effective supervision of insurance practitioners and in affording protection to customers who have been adversely affected by the collapse of insurance companies. Tue paper recommends, among other things, the need for some improvements in the office of the Commissioner of Insurance, the Tanzania's regulatory authority. It is also recommended that insurance practitioners endeavor to work together so as to more effectively face the challenges facing them. The ope rationalization of a local reinsurance corporation is also strongly urged for.
Available in printed form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG9261.T34M8 )
Insurance industry, Law, Practice, Tanzania
Muruke, Z.G (2002) Challenges and effects of liberalization of the insurance industry in Tanzania: Law and practice.Master dissertation, University of Dar es Salaam, Dar es Salaam.