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.