2.

Classes/categories of insurance-choosing
which way to go!
The Insurance Act,2009 categorizes insurance into
two main categories namely Long term (Life)
Insurance and General (Non Life) Insurance
business (see S. 17 read together with the second
schedule thereto)
In the insurance market, these are further
subdivided into various categories depending
either on the nature of risk covered or benefits and
realization thereof.
 2.1. Life insurance:
Insurance under which the insurer’s liability is
subject to human life or on the happening of a
contingent which in itself is dependent upon human
life.
Benefits payable either upon death of the policy
holder or periodically during life of the policy
holder.

It is a form of investment and protection at the

same time and generally not a contract of
indemnity.
It is further subdivided into the following
categories:

i. Term Assurance

ii. Annuities (Marriage and Education)

iii. Endowment

iv. Whole life

i) Term Assurance:
 Variably known also as Temporary insurance
 It is insurance where benefits are payable only if the
assured dies within a short defined period.
 Taken for two main purposes namely;
a)To cover business or working trips abroad with
special considerations such as political or
environmental which lessen the chances of survival e.g.
hunting, or visiting an insurgency state, and
b)To provide additional security for persons granting
loans.
 In case of death, the insurer pays benefits to the
insured’s beneficiaries, but where the insured survives
the period of insurance the insurer does not pay
anything.
ii) Annuities (Marriage and Education)
This is an arrangement of life insurance for
obtaining a sum or series of sums of monies
for specific purposes at defined or set dates.
It is an arrangement by which money may be
profitably set aside over a period of years to
provide for a future need, particularly
education and or marriage.
Beneficiary is not necessarily the policy holder
but other persons such as son/daughter,
relative etc.
Benefits are paid periodically at maturity-
hence annuities.
In educational annuity, in the event of death of
the assured prior to maturity, payments of
premiums cease absolutely but the cover
continues.
In case of its maturity, sum assured is paid in half
yearly installments for a period of five years.
In marriage annuity, the sum assured is paid in
lump sum at maturity.
However, the insured may opt to be paid lump
sum at maturity.
iii) Endowment Assurance
This policy is a combination of investment and life
assurance protection.
Short term endowments are for investment
purposes or providing for education of the children
where as long term endowments are for purposes
of providing for old age or augmenting pension and
protecting family interest.
In the event of accident, medical bills are payable
by the insurer out of the policy, but in the event of
premature death the sum assured is paid to the
beneficiaries.
In the event of death of the insured within the
period of endowment the basic sum assured is
payable either immediately or at the end of the
selected period or partly at death and partly at end
of selected period.
Where the insured survives up to maturity of the
policy, he is paid the sum insured plus bonus.
Normally the premium is constantly payable
through the period of endowment.
• iv) Whole life:
This is purely an endowment policy which is taken
to cover the whole period or entire lifetime of the
insured.
Thus, it does not mature until the assured
dies/expires.
Benefits are therefore payable only to the named
beneficiaries (NOTE-This carries the danger of moral
hazards- e.g. Cleaver vs. Mutual Reserve Fund Life
Association: CA 1892: [1892]1QB 147 & Giles vs.
Giles (1972) Ch 544-where women killed their
husbands to benefit from the policy)
As such, premium are payable yearly until such
maturity
If death occurs within the selected period say 30
years from commencement, the basic sum
assured is payable at death or at end of selected
period.
Additionally, an annual payment of certain
percentage say 10% of the sum assured is paid for
the reminder of the selected term.
If death occurs after policy term expiration, sum
assured is payable at death without any further
payments.
2.2. Non life insurance-property insurance
 This is subdivided into Motor and Non Motor insurance
2.2.1. Motor insurance:
Note:
 Classification of Motor for purposes of rating and
insurance:
a) Private Cars
b) Commercial Vehicles i.e. a) Motor trade (road risk),
Goods carrying vehicle, Cars for hire, Hire Cars-Hirers
driving, Motor Omnibuses, special types e.g.
agricultural and forestry, ambulances, mobile
canteens, cranes etc.
c) Motor cycles
Motor Insurance:
Insurance taken in respect of possession and use
of a Motor vehicle hence covering losses that
may occur due to use of the vehicle either to
properties or to the vehicle itself such as due to
theft and fire.
It is further sub categorized into the following:-
i. Statutory Liability Policy/cover,
ii. Third party Only Policy,
iii. Third party-fire and theft Policy,
iv. Comprehensive Policy
 i) Statutory Liability Policy/cover

Provides minimum cover required per section 4 of

the Motor vehicles (Insurance), Act.
Covers liability of the vehicle user or who permits
its use for death or injuries to 3rd parties.
Compensation is for unlimited amount (in relation
to the person concerned not amount payable)
 It covers liability of legal personal representative in
the event of the insured’s death.
Commonly known as the lesser cover-“bima
ndogo”.
ii) Third party only Policy:
The scope of coverage under this policy is wider
than the statutory liability policy
Apart from covering liability to other persons(3rd
parties), it covers damage to third party property
for which the insured might be liable.
It excludes the following:
a) Death or bodily injuries arising out of and in the
course of employment of the person employed by
the insured
b) Death or bodily injuries to passengers in the
vehicle who are members of the insured’s
households.
 c) Damage to property belonging to insured
or held in trust by or in custody or control of
the insured or any member of insured’s
household.
Unlike in Statutory Liability policy which is
unlimited, in private Car Policy, there are policy
limitation as to liability
It excludes own damage.
Examples of coverage: Covers passengers (fee and
non fee paying save for the insured’s household
members) and pedestrians
iii) Third party fire and theft policy:

A combination of Statutory cover and third party

only, but the cover extends to insured’s vehicle in
respect of fire and theft only.
It excludes own damage as a result of road
accident. i.e. it is suitable cover for motor traders
and those who travel for long period leaving their
vehicles parked in garage.
Hence this covers in-house risks of fire and theft.
iv) Comprehensive cover:
This takes aboard the rest of the covers-except
death or injury to the assured and his relatives.
Benefits payable falls under three categories
namely;
a) Own damage: indemnity against damage to the
vehicle and its accessories and spare parts while on
the vehicle.
 The perils covered includes Accidental collision or
overturning, collision or overturning consequent on
mechanical breakdown or on wear and tear, fire,
external explosion, self-ignition, lightning, burglary,
housebreaking or theft, any loss or damage to vehicle
whilst in transit by road, rail, inland waterways or
elevator, including the process of loading and
unloading incidental to such transit.
Note:
The insurer’s maximum liability is limited to the
insured’s estimated value of the vehicle as shown in
the policy schedule.
An insurer, in the event of damage or loss, has an
option to either pay amount in each category or
repair or replace/reinstate the motor vehicle or any
part.
In most cases, the insured cannot repair without
obtaining consent of the insurer and estimates must
be communicated to the insurer.
b) Liability to 3rd Party, and
c) Medical expenses at a limited sum as stipulated in
the policy.
Policy exceptions under Comprehensive Cover:
Though the wider cover under comprehensive
policy, there are exceptions namely:
i. Consequential loss;(e.g. in Joseph O. Kayoma vs.
NIKO Insurance, Com case No.15/2006)
ii. Depreciation;
iii. Wear and tear;
iv. Mechanical or electrical breakdown;
v. Failures and breakages;
vi. Where the vehicle is involved in an accident while
outside of the geographical coverage, or on a
different route or lane.
 vii) If the vehicle was being used for any other
purpose than the mentioned in the schedule.
viii) If it was being driven by anyone other than the
insured or his authorized driver
ix) If the loss/damage was caused by war, invasion,
strike, riot and civil commotions etc., flood,
typhoon, volcanic eruption etc or any perils of a
similar nature.

• Note: All covers/ options are subject to respective

policy terms, conditions, exclusions and other
clauses.
2.2.2. Non Motor insurance:
• This cover liability and property hence the term
“liability insurance” and property insurance”.
i) Property Insurance:
Covers the property against loss/damage due to
insured risk to the property. It includes Fire,
Marine (cargo and Hull), Aviation
.
ii) Liability insurance
Covers liabilities likely to fall unto the insured due
to risks associated to his business.
It includes: Fidelity guarantee, Group personal
accidents, Money insurance, Professional
Indemnity etc.
It is also a policy that protects an individual from
the risk that they may be sued and held liable for
something such as malpractice, injury or
negligence.
NOTE: There are emerging classes of insurance in
Tanzania market worth noting. These include
Bancassurance, Takaful, and Micro insurance
3. The Tanzania Insurance Regulatory Framework
At the center of regulation is the Tanzania Insurance
Regulatory Authority (TIRA) established under the
Insurance Act, No.10 of 2009. This Authority
replaced the former Insurance Service Supervisory
Department.
The authority, as its name connotes, is charged with
regulation of the Insurance industry. It has at its
disposal as tools Laws, Regulations, Rules and
Policies as well as various instruments including
circulars and directives in the discharge of its
functions.
3.1. Framework form/Basis:
i. The Laws (Local and international)
ii. The National Insurance Policy (Draft)
iii. The Circulars
i) The Laws:
a) The Insurance Act, No.10 of 2009
b) The Motor Vehicle Insurance Act, Cap 169 R.E 2002
c) The Contract Act, Cap.345 R.E 2002
d) The Companies Act,Cap.212 R.E 2002
e) The Marine Insurance Act,1906 (UK-applicable under
the JALA-(See Tanzania Fertilizer Company Limited
vs. NIC &Others, Commercial Case No.74 of 2004)
f) The Insurance Regulations,2009
g) The Micro Insurance Regulations,2013
Other Laws
a) The Stamp Duty Act,
b) The Electronic Transactions Act, 2015
3.2. Framework Content-What is regulated
In the Tanzania Access to Insurance Diagnostic
document no.7 (by FSDT et. al 2012), the content of
regulatory framework can be categorized or
analyzed into five main categories.
For easy of comprehension, we adopt the same as
follows:
i. Institutional and Corporate governance regulation
ii. Product regulation
iii. Prudential regulation
iv. Intermediation regulation
v. Consumer protection
i) Institutional and Corporate governance regulation
(Part III of the Insurance Act-Ss.15-51)
 Concerned with statutory requirements for carrying out
underwriting insurance and corporate governance
issues such as share capital, reserves, ownership
structure etc.
 Generally, it is the regulation of an entity’s capacity to
underwrite insurance business or to work as an
intermediary etc.
 This is governed by Part III of the Insurance Act (supra)
ss.15-51).
 It provides for matters such as capital requirements,
Margin of solvency, who can be an insurer, mandatory
registration of insurance business and requirements for
registration, cancellation of registration etc.
ii) Product Regulation

 Since insurance is a regulated business, all insurance products

(classes of insurance or options of cover) that are floated in
the market are supposed to be regulated as pat both market
and consumer protection strategy.

 An insurer must notify the commissioner of insurance on the

insurance or class of business he has offered or intending to
offer and there must be approval of the same. (see Sections
28(1)(a), 52, 114 of Act No.10 and regulations 11 &12of the
Micro insurance Regulations,2013).
 Example of standard products that are compulsorily offered
includes the motor vehicle insurance -s.4 of Cap.169.

• Note: Product regulation does not relate to regulation of an

insurer or intermediary but the product itself
iii) Prudential Regulation:
Refers to a type of financial regulation that
requires financial firms to control risks and hold
adequate capital-
It can be micro and micro prudential regulation
depending on the size and nature of the subject of
regulation i.e. individual firm or the whole financial
system of a country.
Hence, regulatory focus is on ensuring that the
respective insurance firm is capable at all times to
run the business of insurance and manage all risks.
Relevant provisions focuses on:
a)Licensing and license renewals, registration
requirements(s.16, Regulation3), separation of
insurance and brokerage(s.18)
b) Financial Management i.e.
Valuation of assets (s.37, reglns.22,23,24),audit
requirements, actuarial requirements etc.
c) Filing returns requirements
-s.40,regln. 28 as well as broker’s
returns.(s.73,78,reg.30)
d) Investment requirements-
There are restrictions and permission with regard
to investments to be made and the percentage of
insurance money to be set for investment.
e.g. restriction against lending outside Tanzania
without Commissioner’s consent, permission to
invest in financial derivative by consent of the
commissioner, requirement to maintain asset
register, requirement of an investment committee
and investment policy for each insurer, etc. (ss.
44(1) 44(3),45,47,49 and regulation 36 read
together with the 5th Schedule to the Regulations)
e) Capital solvency and reserving requirements
e.g. to ensure that the insurance company is liquid at
all time and able to discharge/pay claims. e.g. Paid up
capital and margin of solvency (ss.19 and 20 read
together with regulations 18 and 21), Reserves (for
unexpired risks, outstanding claims and capital
reserves a.k.a contingency reserves to cover
fluctuations insecurities and variations in statistical
estimates-regulation 27)
f) Mandatory Re-insurance through cession (part VII-
to compel insurer to cede part of the risks to external
insurers (Africa Re, ZEP-RE and Tan-RE under Ss. 79
&84).
iv) Intermediation Regulation (Part VI- Ss. 61-78)
 'Insurance mediation' is defined as the activities of
introducing, proposing or carrying out other work
preparatory to the conclusion of contracts of insurance,
or of concluding such contracts, or of assisting in the
administration and performance of such contracts, in
particular in the event of a claim (Financial Conduct
Authority of England at
https://www.handbook.fca.org.uk/handbook/PERG/5/
16.html. These activities are performed by
intermediaries.

 These activities are performed by intermediaries who

are defined under Regulation 2 of the Insurance
Regulations, 2009 as
i. Insurance Agents: Contractual relationship with
Insurers through Agency Agreements. They work for
one or multiple Insurers but not exceeding three.
ii. Insurance Brokers: These help customers to choose
between insurers and products. They have no
contractual relationship with an insurer but they
receive commissions. They are contractually agents of
customers.
iii. Surveyors
iv. Loss adjustors
v. Settling agent
vi. Risk surveyors and
vii. Members of the Insurance Institute of Tanzania
•
a) Regulatory focus for intermediaries
 Regulation of intermediaries in Tanzania Insurance
industry, just like regulation of insurers, focuses on their
Registration, qualifications, capital requirements, returns
as well other duties.
i) Insurance Brokers:
 Registration Requirements: S.67;Must be body corporate,
with office in Tanzania, member of TIBA, Resident principal
officers with sufficient knowledge in insurance. See further
ss.63, 65, and regulations 6,7)

 Prudential requirements: Capital requirements-s.69;

Vicarious liability of actions of employees-S.70; remission
of premium to insurer-S.72(2) and Regulation 34-within 15
days; currently repealed and replaced by new s.72-
Agents:
Registration
• Minimum qualifications of an agent:
 Holder of Secondary education certificate or Certificate of
proficiency in insurance, citizen and resident of Tanzania,
not bankruptcy or if a Company-prove incorporation and
Tanzanian residency. (S.64(1) and Regulations 10 and 11)
 (However, a question may be as to how to establish
corporate citizenship- the case of Hertz Corp. vs. Friend
et.al- No.08-1107 delivered by the US Supreme Court on
the 23rd February, 2010).
 Commissioner may refuse to approval the agency
agreement where the applicant does not meet the
qualifications set (s. 64(5).
 No special procedural requirements for registration-just
submit Agency agreement for approval along with
application form to the COI through the principal (s.64
(1) (2)
 Agent may act for one general insurer and one long
term insurer (S.62 (1)
 An insurance broker agent may not act for more than
one Broker (S.62 (4)
 Must act within terms and conditions of agency
agreement
 Premium paid to agent deemed paid to insurer/broker
(S.63 (2)
 NOTE: Agents are not directly regulated and neither are
they licensed. The insurer is held accountable for the
acts of the Agent- hence their regulation is vide Agency
Agreement.
• V) Consumer Protection Regulation
Note:
 The above discussed categories of regulation are all
aimed at protecting a consumer as well as the
insurance industry.
 However, specific regulatory content in respect of
consumer protection includes the following:
i. The Code of conduct and ethics for Tanzania
Insurance Industry and Intermediary code of Conduct-
as Schedules to the Insurance Act-which is binding
instrument to all key players-insurers, brokers, agents,
assessors, adjusters (the code promotes principles of
utmost good faith, impartiality-require avoidance of
inducement and elements of impartiality in dealing
with clients etc
ii) Compulsory membership to professional
associations
iii) Promotion of competency-e.g. on qualification of
CEOs, as well as insurance brokers and agents
iv) Consumer recourse-the Insurance Ombudsman
Services-ss.122-125)-contrast with Insurance
Appeals Tribunal-S.126-note yet operational and
only a recourse for the Registrant-where
aggrieved by the COI’s decision).
v) Institution of technological measures to detect
fake insurance covers e.g. TIRAMIS-downloadable
application, https:/mis.tira.go.tz, and via text
message to 15200)
vi) Restricting import insurance to Tanzanian Insurers
under s.40 of Act No.7 of 2017(Supra) which
repeals and replaces s.133. as well as launching
the Tanzania Import Insurance Portal (tiip at
https://www.tiip.co.tz
vii) Consumer education-through the Insurance
Education Policy