This week GERALD KITABU interviewed lawyer Runyoro Adolf of the Lawyers’ Environment Action
Team (LEAT) on the insurance industry in Tanzania. Excerpts:
QUESTION: What’s insurance?
ANSWER: Insurance can be defined as a promise of compensation for specific potential future losses in exchange for a periodic payment (premiums). Legal definition of insurance is that contract between the insured and the insurer where by the consideration of payment of premium, the insurer agrees to make goods lost by the insured payable. Therefore a person who insures any property has a subject matter in that property and we call that insurable interest.
Q: What is the difference between life insurance and other normal insurance?
A: Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum.
Q: There’s also something called assurance and insurance, what is the difference between the two?
A: The difference here can be denoted from the use of the terms "insurance" and "assurance". in general, "insurance" refers to providing coverage for an event that might happen like fire, theft, flood, landslides, earthquakes, etc.), while "assurance" is the provision of coverage for an event that is certain to happen hence life is certain to happen and so falls under this category know as assurance.
Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss.
Q: So, who’s actually eligible for insurance?
A: Any person is eligible provided he or she is capable of paying premium to the insurer. In fact, I would like to advise each and everyone to take on insurance cover be it of ones life or property. It may sound ridiculous due to the economic situation and poverty level in our country but we real need insurance to be assured of any risk or contingence that might happen to us to avoid setbacks that may lead us fall back to poverty after loss of our business or suffering of our children or wives or parents after death.
Q: What’s the level of awareness among the general public about insurance?
A: I am very sure the level of insurance is very low in Tanzania and other third world countries. I can assure you even in compulsory insurances like that of cars. It’s only 40 percent who know the use and importance of insurance. Had it not been compulsory then very few Tanzanians would have insured their cars.
Q: What are challenges facing insurance industry?
A: One of the biggest challenges is the level of awareness among the general public. Otherwise, some other challenges are those that regard to deceit of the people who want to be refunded through false means.
Q: So, if that is the case, what should be done to raise awareness among the general public on insurance?
A: I think insurance companies just like other business should take the responsibility to build capacity through various trainings and seminars as they advertise their business just like social security schemes such as National Social Security Fund (NSSF), Local Authorities Provident Fund and Parastatal Pension Fund.
Also, the government should as well emphasize the issue of insurance in the country. The law in the country should put it clear that every employer must insure lives of his employees.
Q: By the way how effective are Tanzanian insurance companies?
A: First of all the law requires all insurance companies to be resident companies under section 16 of the Insurance Act and should fulfill all the requirements of registration under section 21 of the insurance Act 0f 2009. What I can say is that the insurance companies in Tanzania must do their best to conduct insurance business and satisfy their customers.
Forexample, they could produces annual insurance performance reports, presentations and papers, quarterly insurance market performance report and quarterly insurance bulletins, complaints handling and the rest. All these can be found on their website so that every one could access their services, information and reports.
Q: What should be insured and what should not be insured?
A: What I can say here is that everything can be insured. But this will depend on what the insured what to cover. But when it comes to life assurance, age matters.
However, on the question on who should conduct insurance business, the Law stipulates it very clearly under section 16 of the Insurance Act. One of the requirements is that it must be a company registered under the Companies Act or any other law of the United Republic. But should as well follow the rest of the requirements having the principal office in Tanzania, being a member of association of insurers, its directors, manager, controller and principal officer handling day to day management should be resident in Tanzania and its directors, manager, controller and principal officer are persons with sufficient knowledge and experience in insurance business.
Q: There are allegations that some people try to deceive or cheat to benefit payments from insurance companies, what are your views on this?
A: Yes, but many case normally fall in situations where one has no insurable interest. Insurable interest means the interest a person has in a given item, property or a given life which he stands to lose in case of undesired future event occurs to it. But this is also somehow complicated depending on when it should exist. for example in property insurance, it must exist at the time of loss while that of life exists at the time of execution or making the contract. So some people are not aware and ill advised come up to claim for indemnity. It also happens that some people set fire onto their insured property so that they can be refunded or indemnified and all the alike.
Q: can one be insured in more than one insurance company?
A: Yes, it is very possible. But I should put this clear that insurance companies are not befit companies to those insured. There are not there to give more or less than what is covered. So, when one suffers a loss or in case of any contingence, all the insurance companies will contribute to restitute the one who has suffered loss to the original position he was before as if the loss never occurred.
I would like to advice insurance companies to take initiatives of educating people regarding insurance through various publications, online like social networks like face book, twitter and media TV programs and radios.
Given the ongoing constitution review process, Tanzanians, should think of including the issue of insurance of all employers in the new constitution especially life insurance because insurance is not meant for only people who are employed, it is meant for everyone including farmers and business men. Everyone should think of insuring his life and property