Initial Market Assessment : Country Scoping Note--Tanzania
Catastrophe exposure in Tanzania is limited and the key perils are drought and flood. These events have minimal impact on GDP but severe impacts on individuals in the agriculture sector, increasing their vulnerability. Thus, while there are merits...
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| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/07/24773652/initial-market-assessment-country-scoping-note-tanzania http://hdl.handle.net/10986/22429 |
| Summary: | Catastrophe exposure in Tanzania is
limited and the key perils are drought and flood. These
events have minimal impact on GDP but severe impacts on
individuals in the agriculture sector, increasing their
vulnerability. Thus, while there are merits to developing
the agriculture insurance market in Tanzania, less of a case
can be made to develop the catastrophe insurance market.
Engagement in Tanzania to develop private sector catastrophe
risk and agriculture insurance should be seen as a medium to
long term engagement. Banking penetration is low, as is
insurance and micro-insurance penetration, even when
compared to regional countries. In addition, the insurance
industry has struggled in recent years with profitability,
indicating that insurance technical capacity within the
country may be limited. There are low levels of local
reinsurance capacity, with the majority of risks being
reinsured off-shore. Thus development of catastrophe and
agriculture insurance in Tanzania shall involve a multi-year
engagement. Initially it is of paramount importance that
insurance companies can manage insurance risk correctly
(before beginning to think about adding covariate risks to
their balance sheets). Expansion of disaster risk insurance
into Tanzania could be seen as a second phase of an
engagement looking to develop these markets in Eastern
Africa, with Kenya targeted in the first phase. Given the
comparative advantages of engaging in Kenya (see Kenya
note), a potential course of action would be to use Kenya as
a demonstration case in east Africa to spark interest in the
Government for development of catastrophe and agriculture
insurance markets. Using Kenya as a model example, lessons
learnt can be applied in Tanzania to look to stimulate the
catastrophe and agriculture insurance market. This strategy
will also leverage private sector insurance companies that
have headquarters in Kenya and field offices in Tanzania
(Jubilee for example). |
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