Ruling CCM wants state to start insuring property

18Dec 2018
The Guardian Reporter
Dar es Salaam
The Guardian
Ruling CCM wants state to start insuring property

THE ruling Chama Cha Mapinduzi will include a clause on a pledge to have all state property insured in its 2020 manifesto, Secretary General, Dr Bashiru Ally has said.

Commissioner of Insurance, Dr Baghayo Saqware is advocating for the insuring of state property.

State owned Sunday News newspaper wrote in its edition last weekend that Dr Ally the move is aimed at protecting government property and lives of civil servants while boosting the insurance industry.

He said the move will lead to rapid growth of the industry as all big development projects get insured which will also contribute to economic growth as well as saving Treasury billions of shillings paid to replace state property destroyed in accidents but also compensate victims of such incidents.

Dr Ally was speaking to a Tanzania Insurance Regulatory Authority (TIRA) delegation that paid him a courtesy call at his Dar es Salaam office.

Commissioner of Insurance, Dr Baghayo Saqware told the ruling party’s chief executive that TIRA proposes that, among other things, to have all big development projects insured domestically because currently records show that most of the projects are being executed by foreign contractors and consultants who insure abroad.

Dr Saqware said Tanzania has been losing a big business because of such a lapse in regulations which will greatly contribute to growth of the industry and the economy in general once proper regulations are in place.

“Our proposal is to have all these issues included in the party’s next (election) manifesto, which should also put emphasis on insurance covers for small-scale farm crops, traders and cooperative societies,” the Insurance Commissioner noted.

He said TIRA always encourages insurers to innovatively introduce new and affordable insurance products to all people, noting that there is good progress for some insurers have already innovated various products, including transport insurance whereby a passenger can pay as low as 200/- premium when on journey.

“We are certain that if every Tanzanian is capable to pay for at least one of the insurance products, we will have played multiple roles at a time,” Sunday News quoted Dr Saqware.

Dr Ally commended TIRA for the proposal and asked the authority to submit the priority areas, saying the suggestion has come at the right time as the party is about to embark on the new manifesto writing next month.

The government has long suffered billions of shillings in property and lives of public officials through accidents as its property which includes buildings, motor vehicles and ferry boats.

A draft National Insurance Policy of 2014 signed by former Finance Minister, Saada Mkuya Salum said Treasury spent over   4.7bn/- to compensate survivors in three major accidents which happened between 1995 and 2013.

The payments included 400m/- to compensate survivors of MV Bukoba which sank on Lake Victoria in 1995; over 4.06bn/- compensated victims of Mbagala and Gongo la Mboto munitions explosions while 332.2m/- compensated survivors of MV Skagil boat which sank in the Indian Ocean I 2013.

“Despite  that  there  has  been  no  specific study  to  quantify  the  cost  which  the  government  incurs  for  not  insuring  against  risks,  there  are  few  incidences  in  which  the  government  was  forced  to  incur  costs  as  a  result  of  accidents  which  otherwise  could  have  been  paid by  the  insurance  industry  had  they been insured,” the draft NIP 2014 stated.

The draft further noted that a number  of  studies have been carried  out in the country on the subject and came up with findings  that  inform  policy  recommendations  for  the  insurance  sector including advising the state on the need to insure its property.

“With  the  exception  to  government  aircrafts,  the  rest  of  government  assets  (buildings, ferries, and motor fleet) are not  insured. The study recommends that the government should insure its assets in order to free the national budget from compensating victims of accidents,”

It further pointed out that the government lacks reliable loss experience data on its assets and  recommended that the state initiates a strategic loss experience data base build  up  to  be  centralised  in  under the Directorate of Government Assets Management under the Ministry of Finance.

The insurance policy draft which was adopted in 2015 to become an official policy also added that government  should  insure  its  assets  for  both  property  and  liability  risks  for  the  purpose of freeing the national budget.

“This will boost the industry and promote public awareness of insurance and its use in mitigating risks. The economy would benefit from the correlation between the sector and the national growth rates,” it noted. 

“Often  large  losses  involving  government  assets  such  as  motor  vehicles,  trains  and  marine   vessels   occur  whereby   those   suffering   the   losses   are   not   equitably   compensated,” the draft explained arguing that there is urgent need for the state to start insuring its assets and the public.

The draft also noted that in addition, public   liability   insurance   is not   a   requirement   for   many   types   of   properties, including most of those used by the public hence accidents involving such properties and structures lead to dire consequences to victims of such accidents.

“For  limited   requirement   of  compulsory  insurance: professional   indemnity   insurance  is  a  requirement  for  only  a  few  types  of  professions.  There  is  a  critical  need  to  streamline  the  liability  procedures  to  ensure  that  coverage  and  benefit  amounts  are  sufficient  enough  to  offset  the  economic  loss  of individuals  affected  by mistakes committed by professionals such as engineers and medical doctors,” the draft advised.

It said if the government adopts a policy of compulsory insurance for its assets, the insurance sector is projected to  grow  at  an average  annual  rate  of  33  percent  over  the  next  ten  years with soaring insurance penetration to cover the majority of the people.

A safe and stable insurance industry is vital for underwriting stability and confidence in the country’s economic  system.  Therefore, efforts  for  improving  performance  of  the  economy  and  living  standards  of  the  population  must  give  particular  attention  to  development of the insurance sector, the NIP 2014 draft suggested. 

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