UNITED REPUBLIC OF TANZANIA MINISTRY OF FINANCE

KEYNOTE ADDRESS DELIVERED AT KARIMJEE HALL, DAR ES SALAAM ON THE OCCASION OF THE 5TH ANNUAL INSURANCE DAY ORGANIZED BY THE INSURANCE INSTITUTE OF TANZANIA ON MONDAY, SEPTEMBER 3, 2001 BY HONOURABLE BASIL P. MRAMBA, (MP.) MINISTER FOR FINANCE, UNITED REPUBLIC OF TANZANIA

President of the Insurance Institute of Tanzania Mr. Wilson Ndesanjo, Your Excellencies, Members of Diplomatic Corps, Heads of International Agencies, Commissioner of Insurance Mr. Israel L. Kamuzora, Chief Executives of Insurance Companies and Broking Houses, Insurance Agents, IIT Governing Council Members, IIT Members, Distinguished Delegates, Ladies and Gentlemen.

I feel greatly honoured to have been invited to officiate at the 5th Annual Insurance Day of your esteemed professional association which is being held at Karimjee Hall, a venue which formerly used to house the National Assembly. I understand that you are here not as legislators but as insurance practitioners with the view to exchanging views and experiences relating to the industry. 2 Mr. president, I wish to thank your Association for inviting me as Chief Guest at this auspicious conference. As Minister responsible for finance, I am proud to interact with professionals involved in the insurance industry which forms part of the financial sector.

As you are all aware, regulation of the insurance industry falls under the Insurance Supervisory Department which is based in the Ministry of Finance.

According to available statistics, the insurance industry in Tanzania generated a premium volume of Tshs. 39.56 billion in 1997. This accounted for 2.72% contribution towards the Gross Domestic Production (GDP). After liberalizing the industry following enactment of Insurance Act No. 18 of 1996, 10 insurance companies have been licensed to operate in the country. With 10 insurance companies in place, the gross premium volume has increased from Tanzania Shs.39.56 billion in 1997 to Tanzania Shs.41.76 billion in 2000. In spite of the increase in gross premium volume, the industry’s contribution towards GDP declined from 2.72% in 1997 to 2.51 in 2000.

In view of the fact that each insurance company in the competitive marketplace intends to grow in terms of the volume of business written with corresponding premium income, it is imperative that marketing efforts be channelled towards the procurement of business both form rural and urban areas. I therefore challenge the existing insurance companies to reach out to various parts of the country including rural areas rather than concentrate in Dar es Salaam and other big towns such as Mwanza, Arusha and Mbeya.

Placing insurance business in the books of an insurance company is only one aspect of the business. It should be 3 underscored that policyholders transfer their risks to insurance carriers because they expect that they will be compensated on the occurrence of unfortunate events. In this regard, insurers should ensure that genuine claims are paid fairly and promptly. Prompt and fair claim settlement will promote the image of the company or industry as a whole. Failure to provide the service in the manner described, will discourage people from buying insurance covers. This aspect will translate into smaller premium volume industry-wide, resulting into lower contribution towards GDP growth. Such outcome is not one of the intended objectives of liberalizing the economy.

Ladies and Gentlemen, the insurance industry has great role to play in stimulating the economy. If we all believe that competition is good and that is why we welcome it, we should see the 10 insurance companies compete fairly by providing high quality and innovative products. For instance, insurance companies should come up with appropriate medical insurance schemes in order to address the issue of health care costs following introduction of cost-sharing scheme in the health sector. Other innovative products include life assurance plans that will offset the effect of inflation, burial policies to cater for funeral expenses, education policies to assist students in the payment of school fees etc.

Apart from such products, there is need to introduce private pension schemes that will augument statutory schemes such as NSSF and PPF . Such schemes will enable retireees collect adequate benefit that will keep pace with increasing cost of living. Private pension schemes can also cater for self-employed persons. 4 Ladies and Gentlemen, this advice is being given free of charge. You should not expect any fee note from me.

Mr. President, I do not wish to digress from the theme of today’s conference which I understand is “Towards Attaining Good Corporate Governance in Insurance Industry”. This is a well chosen and timely theme. May I take this opportunity to urge all players in the insurance market including insurance companies, intermediaries and other service providers such as loss adjusters and surveyors to ensure that there is good corporate governance in their respective organizations. This entails proper maintenance of all business records including accounting records, timely preparation of financial statements, filing of returns with tax authorities as well as the office of Commissioner of Insurance and full compliance with legal procedures and regulations.

For an industry that is vested with public interest like this one, it is expected that each player will observe utmost good faith which I understand is one of the cardinal principles of conducting insurance business, and therefore an important aspect of good governance. I need not remind you of the need to be in the fore-front in observing this principle yourselves but I should emphasize the fact that if you do not practise what you preach, you will erode public trust which will in turn adversely affect your business.

Ladies and Gentlemen, when the guest of honour is given the chance to say a few words, he should not end up taking up a lion’s share of the available time. I recognize that as insurers you normally grant an insurance cover within certain limits. For fear that I might jeorpadize the chance of getting a claim paid by deviating from the objective of being here, I now wish to declare the conference open and wish you very fruitful deliberations. 5

Again, thank for inviting me. My ministry will be happy to receive a record of your proceedings, for the purpose of follow up where the need arises.

BASIL P. MRAMBA (MP.) MINISTER FOR FINANCE SEPTEMBER 3, 2001