Tanzania is a growing market in terms of insurance and many of the global insurance giants now focus on this market. For the last few years, the statistics show that the insurance industry in Tanzania
had been growing at a constant rate of 20% yearly for about a decade, but still its penetration level is hardly about one percent of the gross domestic product (GDP) of the country. This is found to be far below the global average of 2.3%.
Insurance to rural people in Tanzania
The major reason why the penetration level is so less is that the insurance providers still fail to cover the rural communities of Tanzania by offering adequate insurance policies to cover their needs. The rural community in greater Tanzania is still highly under-served and the formal financial institutions have avoided them to a large extent or failed to offer the most sustainable services to rural Tanzania.
In such a scenario, the semi-formal and informal institutions have take up the role of alternative providers of financial services, but they most of the time are not able to provide service in a proper manner due to weak institutional capacities and managerial incapability.
It is also a negative fact that most of these informal provider’s charge very steep interest rates, which keeps the normal communities away from the insurance
. The people who live in rural Tanzania may access the financial services more to purchase the agriculture inputs, to obtain veterinary, and to maintain infrastructure etc. They are more focused on contract labour, planting, harvesting; transporting goods to the markets etc.
They need to make and receive payment based on agriculture and cheap labor, and they may also need to manage peak season incomes to compensate the low season. However, for health and social circumstances, most of them are in real need of having insurance, but they are largely unaware of it.
Insurance to rural people
When it comes to the rural Tanzania, most of those who live there are not even aware of the concept of insurance and the benefits coming packed with it. So the approach should be of educating them first about the need for insurance and how having insurance will help them live a more secured and healthy life.
It is estimated that nearly about 70% of adults in the developing world are not having access to any sort of financial services, and this percentage is higher in the rural Tanzania. There are many microfinance institutions (MFIs)
have enhanced their rural operations lately, but still they were not able to penetrate more than 5% of the rural population.
It has to be noted the climate change is another major thing affecting the rural communities as flooding or storm can bring a bit loss to their farming as well as cut down their opportunities for employment. So, insuring their corps from natural hazards will be one of their primary priorities. Considering the scenario of social insecurity, people of rural Tanzania may be interested in getting insured for their life and also against accidents and theft etc.