Speaking in Dar es Salaam yesterday during the training on the account’s management, Mafuru congratulated the Tanzania Insurance Regulatory Authority (TIRA) and CRDB Bank Plc for implementing the processes of establishing the account.
The training was attended by insurance companies’ managing directors/ CEOs and chief finance officers at CRDB Banl Plc headquarters in Dar es Salaam.
“The establishment of the Insurance Trust Account is an important step which will help to strengthen the supervision of insurance sector, in accordance with the law and regulatory measures by TIRA,” he said.
Mafuru said the procedure which was previously used to supervise insurance trust funds was not proper, which caused TIRA to fail to supervise the premiums which were returned to insurance companies by the Bank of Tanzania (BoT) upon their maturities.
He said many insurance companies were using premiums from trust funds on other expenditures, without approval from TIRA, which caused liquidity problems, including some companies failing to pay insurance benefits to their clients, because funds were invested in other projects.
He said the decision to open the Insurance Trust Account is being the long lasting solution for such challenges, because TIRA can now directly manage trust funds, which will not only enhance supervisions, but also promote the development of financial sector.
“I would like to congratulate CRDB Bank Plc for being the first bank to join hands with TIRA in establishing Insurance Trust Account. But, I was impressed the way you saw the importance of this training to build capacity for insurance companies on how to manage the account,” he said.
The DPS has called the TIRA commissioner general to ensure that all companies are complying with the law governing insurance trust account, because it will help to stimulate the development of insurance sub-sector as stipulated in the ten years Financial Sector Development Master Plan.
On his part, commissioner for insurance Dr Baghayo Saqware said the source of insurance trust account is the insurance regulations of 2009, which require all insurers to allocate at least 50 percent of their minimum capital level into a trust fund.
Saqware said last year TIRA in collaboration with Association of Tanzania Insurers (ATI) agreed to prepare guidelines on the liquidity investments and supervisions, which also directed the establishment of the Trust Account in commercial banks, in order to avoid the problem of liquidity when it comes into paying insurance benefits to clients.
“The system which is going to be used in this trust account, apart from enhancing supervision, will also increase transparency to insurance stakeholders, specifically insurance companies. Companies can now get the trust fund information on time and invest in accordance with agreement with the regulator,” he said.
Presenting the performance of insurance sector, Dr Saqware informed the deputy permanent secretary that total income increased by 25 percent to 1.146trn/- last year, compared with 2021.
He said the target for this year is to record 1.5trn/- total income.
Speaking during the event, CRDB Bank Plc managing director and Group Chief Executive Officer Abdulmajid Nsekela thanked TIRA for giving the bank an opportunity to process the establishment of the trust account.
Nsekela said the establishment of the trust account is taking the major role of improving transparency and accountability to insurance sector as well as building confidence to the sector’s stakeholders.
Nsekela said the development takes an account 100 percent of all recommendations by stakeholders in insurance sector and is connected to digital system which will help in its management and provision of information to TIRA and insurance companies.
“Our bank is ready to provide investment advisory and help through our treasury and capital markets,” he added.
He said CRDB Bank Plc is also championing insurance service provision (Bancassurance) through its branches, agencies networks across the country.
