analysis of insurance and coping mechanisms: finscope tanzania (2006 & 2009), finscope tanzania...

Analysis of Insurance and Coping Mechanisms: FinScope Tanzania (2006 & 2009),

FinScope Tanzania MSME (2010) & AgFiMS Tanzania (2011) Surveys

for the

Financial Sector Deepening Trust

To analyse the data form the various sources to bring out all the analysis possible on insurance and coping mechanisms for individuals, micro, small and medium enterprises and agribusinesses in order to

Improve the understanding of the nature of risks and coping mechanisms

Help identify market opportunities

Guide the design of appropriate interventions

Objectives

Framework of Analysis

Framework of Analysis

Barriers touptake

Uptake

Determinants of uptake

Level of insurance product uptake

Type of insurance products used

What factors prohibit insurance product uptake?

Risks

Coping mechanisms implemented when risks events are experienced

Coping strategies

Identification of determinants of uptake in terms of:

Individual/business owner attributes

Household/business attributes

Community/external attributes

Uptake of Insurance Products

Overall levels of uptake of insurance products

% of businesses with insurance

% of adultswith insurance

20

06

20

09

20

10

20

10

20

11

Consumers ex-cluding business

owners

Consumers ex-cluding business

owners

MSME's Top 25% MSME Top 25% Agribusinesses

5.4 6.8

0.4 1.3 0.5

In general, insurance uptake is low

Adults 2006 Adults 2009 MSMEs Top 25% MSMEs Top 25% Agribusinesses

2.5%5.4%

0.1% 0.3% 0.4%

9.2% 8.4%

0.7% 2.1% 1.1%

Rural Urban

Overall levels of uptake of insurance products – Rural/Urban

% of businesses with insurance% of adultswith insurance

Adults and business owners in urban areas aremore likely to have insurance than those in

rural areas

Overall levels of uptake of insurance products – Adults 18 years or older by gender (excluding business owners)

Adults 2006 Adults 2009

5.6% 6.8%2.9%

5.8%

Male Female

Males more likely to have insurance than females

Overall levels of uptake of insurance products – Adults 18 years or older by age group (excluding business owners)

18-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55 or older

0.0%4.7% 5.7% 4.2% 4.9%4.6% 5.6% 5.7%

10.4%7.0%


Likelihood of insurance uptake increases with age

Overall levels of uptake of insurance products – Adults 18 years or older by income generating activity (excluding business owners)

Salaries, wages formal

Salaries, wages informal

Rent/investments

Income from agriculture or fishing

Farmworker

Dependents

38.8%

5.8%

Sample too small for re-liable measure

3.6%

Sample too small for reliable measure

5.7%

52.9%

4.0%



Adults 2006Adults 2009

Individuals with regular income in the formal

sector most likely to have insurance

Overall levels of uptake of insurance products – Adults 18 years or older by total monthly income (excluding business owners)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Total monthly income

% insurance uptake

Insurance uptake increases withincreased monthly income

Overall levels of uptake of insurance products – Businesses – by stage of business

No significant relationship between age of business and insurance uptake

MSMEs Top 25% MSMEs Top 25% Agribusinesses

.2% .8% 1.7%0.7%2.6%

0.3%.4% .9% .5%

Start-up phase Growth phase Established businesses

Overall levels of uptake of insurance products – Businesses – by size of business

All MSMEs Top 25% MSMEs Top 25% agribusinesses

0.3% 1.1% 0.5%

4.5%6.5%

1.5%

Micro Small

Micro enterprises less likely to be insuredthan small enterprises

Overall levels of uptake of insurance products – Businesses – by annual turnover of business

All MSMEs Top 25% MSMEs Top 25% agribusinesses

.1% .3% .3%.2% .6%1.6%

.4% .8%1.7% 2.5%4.3%

Ts 3000000 or less Ts 3000001 - 5000000 Ts 5000001 - 10000000 More than Ts 10000000

Sample too small

Insurance uptake increaseswith increased business turnover

Overall levels of uptake of insurance products – Businesses – by registration status

Registered businesses significantly more likely than unregistered businesses to have

insurance

MSMEs Top 25% MSMEs Top 25% Agribusinesses

0.3% 1.0% 0.2%2.3%

6.6%

3.0%

Unregistered Registered

Overall levels of uptake of insurance products – MSMEs – by type of business

MSME Top 25% MSMEs

.2% .6%1.3%3.6%

Traders Service providers

Service providers more likely than tradersto have insurance

Overall levels of uptake of insurance products – Agribusinesses – by type of business

Agroprocessors significantly more likely than other agribusinesses to have insurance

Food crop producers Cash crop producers Livestock producers Processor businesses Service providers

.3% .3% .8%

4.7%

1.4%

Type of insurance products held by the insured (adults 18 years or older excl business owners)* Insurance product uptake too low amongst businesses to do break-down

Car insurance

Households contents insurance

Building insurance

Medical insurance

Personal accident

Loan insurance

Community health Insurance

Funerals/burials

Life insurance policy

Education policy

Retirement annuity

Pension and provident eg NSSF, PPF ZSSF

Short

term

Long t

erm

12.6

2.6

4.5

48.1

Not measured

Not measured

Not measured

Not measured

11.8

4.8

16.7

65.7

12.2

1.0

0.9

87.4

1.4

1.1

6.6

0.0

3.9

2.3

5.7

Not measured

2009 2006

% of insured

Barriers to Uptake of Insurance Products

Barriers to insurance uptake – Adults 18 years or older (excluding business owners)

Some insurance companies make excuses not to pay out

Some insurance companies con people out of their money

These things are in Gods hands

Have other ways of dealing with emergencies

Some insurance companies do not go to the people to tell them about their product

Don't see the need for it

Never thought about it

Don't know how to go about buying insurance cover

Don't know what the term insurance means

Don't know how to find out where to buy it from

Don't know about insurance or how it works

Can't afford it

16.2

14.9

16.8

36.0

34.1

34.0

38.6

52.1

47.6

58.5

66.0

.8

1.1

1.4

2.4

2.7

4.8

11.9

14.5

15.0

18.6

25.7

60.1

Adults 2009Adults 2006

% of uninsured

Barriers to insurance uptake – MSMEs

Don’t have money to pay

Don’t believe in insurance

Cost of insurance is more than the anticipated risk

Business is small

Business not exposed to risk that demands insurance

I don’t have anything that justifies the expense of insuring

Never thought about it

Don’t know how to go about buying cover/insurance

Don’t know about insurance

1.4

3.5

3.5

4.5

7.1

12.5

20.4

33.5

34.7

0.8

5.8

5.1

4.0

3.6

13.6

23.4

32.2

27.9

Top 25% MSMEsMSME business owners

% of uninsured

Barriers to insurance uptake – Top 25% of agribusinesses

The insurance companies are far

Not decided yet

Insurance companies do not pay out when you claim

Insurance companies pay out less than the loss

Insurance companies do not pay out quick enough

Insurance is too expensive

Do not know where to go to get insurance

Business does not need insurance

Do not understand how insurance works

Do not know how to get insurance

0.4%

0.6%

1.0%

1.5%

1.6%

9.9%

11.6%

11.9%

39.2%

39.9%

% of uninsured

Barriers to insurance uptake – Comparing consumers and business owners

Although barriers to insurance uptake has various dimensions, most reasons given by uninsured individuals and business owners for not having insurance, could be related to:

Lack of the understanding of the benefits/value of insurance

Lack of an understanding of how insurance works, what products are available, and how and where to obtain insurance

Lack of trust in insurance and/or insurance companies

Perceptions around the affordability of insurance

Barriers to insurance uptake – Comparing consumers and business owners

51.2%

17.1%

59.1%

3.4%

61.6%

36.6%

3.5%0.8%

55.1%

38.5%

5.1%1.1%

75.3%

11.1% 9.6%

3.5%

Adults 2009 MSME ownersTop 25% MSME owners Top 25% Agribusiness owners& of uninsured

Barriers to insurance uptake – Adults 18 years or older, 2009 (excl) – Rural/Urban

Perce

ptio

n of

affor

dabi

lity

Produ

ct k

nowle

dge

Do no

t se

e th

e be

nefits

of i

nsur

ance

Trus

t ba

rrie

r

63.3%

37.6%

17.2%

4.1%

57.7% 55.7%

17.1%

3.2%

Urban Rural

% of uninsured

Barriers to insurance uptake – Business owners – Rural/Urban

Rural Urban Rural Urban Rural Urban

70.5%

50.5%

66.6%

43.9%

79.0%

57.1%

29.0%

46.0%

31.1%

45.8%

9.6%

18.4%

2.4%4.8% 3.9%

6.3%8.5%

14.9%

0.6% 1.1% 0.8% 1.5% 2.9%6.6%

Product knowledge Do not see the benefits of insurance Perception of affordability Trust barrier

% of uninsured

Top 25 % MSMEsAll MSMEsTop 25 %

Agribusinesses

Barriers to insurance uptake – Attitude to insurance – Uninsured adults 18 years or older 2009

Trying to buy health/life insurance for yourself or your family can bring bad luck

Insurance companies try to cheat people even when they have a good claim

Sometimes, agents recruit clients fraudulently

Insurance companies don't explain their products properly until you try to make a claim

Would like to have insurance but cannot afford it

Having insurance protects you in times of emergency

7.1%

10.5%

11.0%

13.9%

68.9%

70.0%

% of uninsured

Individuals seem to understand the

concept of insurance. A lack of

understanding of what is available and the benefits thereof, impacts on trust and

perceptions of affordability.

Determinants ofUptake of Insurance Products:

Risks with Financial Impact

Risks with financial impact – Adults 18 years or older 2009

Education expenses excluding secondary school fees

Rise in food prices

Destruction of household/property due to floods

Destruction of home and household items due to fire

Secondary school fees

Outpatient expenses

Death of the breadwinner in household

Theft, at household / property

Accident

Drought/famine

Death of a household/family member

In-patient expenses

4.9

5.8

6.8

9.1

9.4

19.1

23.2

23.8

35.1

39.3

39.3

93.2

% of adults

Risks with financial impact – MSMEs

Flooding

Drought

Fire

Accidents/place of work accidents

Theft of money or goods

14.2

22.5

48.8

48.2

68.8

16.1

29.3

46.3

49.5

66.0

MSMEs Top 25% MSMEs

% of businesses

Risks with financial impact – Top 25% of agribusinesses

Weather

Pests/diseases

Prices

Products and/or services not sold

Perils and accidents

Power failure/shortages

70.7%

10.6%

9.4%

3.7%

2.0%

1.3%

% of agribusinesses

Risks with financial impact – Adults 18 years or older 2009 – Rural/urban

Education expenses excluding secondary school fees

Rise in food prices

Destruction of household/property due to floods

Destruction of home and household items due to fire

Secondary school fees

Outpatient expenses

Death of the breadwinner in household

Theft, at household / property

Accident

Drought/famine

Death of a household/family member

In-patient expenses

5.5%

6.6%

8.3%

10.1%

9.4%

17.3%

27.3%

33.0%

42.6%

24.7%

40.1%

81.4%

4.7%

5.5%

6.2%

8.8%

9.4%

19.7%

21.8%

20.7%

32.5%

44.3%

39.0%

97.3%

Rural Urban% of adults

Risks with financial impact – MSMEs – Rural/urban

Flooding

Drought

Fire

Accidents/place of work accidents

Theft of money or goods

12.6%

16.4%

54.5%

47.2%

70.9%

15.8%

28.7%

42.8%

49.2%

66.7%

Rural Urban

% of businesses

Risks with financial impact – Top 25% of agribusinesses – Rural/urban

Weather

Pests/diseases

Prices




71.7%

10.7%

9.3%

1.0%

1.8%

0.9%

65.8%

10.0%

9.8%

1.2%

2.9%

2.7%

Urban Rural

% of businesses

Risks with financial impact – MSMEs per type of business

Flooding

Drought

Fire

Accidents

Theft of money or

goods

12.7%

21.3%

50.0%

48.5%

65.7%

17.0%

31.2%

45.4%

49.8%

66.1%

Traders Service providers

% of MSMEs

Weather

Pests/diseases

Prices




79.1%

7.3%

8.0%

2.0%

0.7%

0.5%

69.2%

12.2%

10.7%

2.7%

2.3%

0.5%

52.6%

26.5%

7.1%

5.3%

2.1%

4.3%

Livestock producers Cash crop producers Food crop producers

% of businesses

Risks with financial impact – Top 25% of agribusinesses per type of agribusiness

Risks with financial impact – Top 25% of agribusinesses per type of agribusiness

Weather

Pests/diseases

Prices




29.5%

1.3%

14.3%

19.5%

12.1%

18.4%

37.8%

5.6%

17.2%

23.7%

8.8%

3.0%

Service providers Processors

% of businesses


Coping with Risk Events

Coping with risk events – Adults 18 years or older 2009

Cash in other financial instruments eg. shares

Claim insurance

Others

Borrow money from employer

Borrow money from bank

Apply for government grant

Don't know

There’s nothing you can do

Postpone plans to pay for something else

Ask community eg. neighbours, church, mosque

Take out savings from bank/other financial institution

Borrow money from sources such as SACCO, money lender

Cut down on household expenses

Wait/ask for donation

Sell assets

Sell agricultural crop/livestock

Borrow money from family/friend

.2

.3

.8

1.3

1.4

1.5

1.9

3.0

3.3

4.0

5.6

5.5

10.0

24.3

25.2

27.5

52.6

% of adults

Coping with risk events – MSMEs

Take out savings with other financial provider

Sell business part assets

Cut down on business expenses

I would involve myself in other activities like farming, fishing, rearing cattle

Apply for government grant

Borrow money from other sources e.g. savings club/money lender

Borrow money from bank

Taking out savings with bank/other financial provider

Borrow money from another small business

Sell personal assets/dispose of agricultural crop/livestock

I don’t have anything in place

Take out savings from a secret hiding place

Borrow money from family/friends

2.1

3.1

2.1

4.6

3.2

4.7

8.8

8.6

7.3

13.4

13.9

28.5

37.7

1.3

2.6

2.9

3.5

3.9

4.2

4.2

4.9

5.2

11.5

16.5

28.6

42.6

MSMEs Top 25% MSMEs

% of businesses

Coping with risk events – Probed claimed risk mitigation strategies – Top 25% of agribusinesses

Insurance

Selling the products outside the country (Export)

Forward contracts

Different sources of income

Several different customers, so not to rely on one

Mixed farming

1.4%

1.8%

3.0%

25.7%

37.5%

51.6%

% of businesses

Coping with risk events – Actual coping mechanisms applied when faced with risk events – Top 25% of agribusinesses

Was covered by insurance

Borrowed/took a loan

Temporary Job

Sold Asset/livestock

Using Savings

0.2%

11.1%

7.5%

13.5%

42.1%

% of businesses

Coping with risk events – Comparing consumers and business owners

Although individuals have many ways of coping with risks with a financial impact, coping mechanisms could broadly by categorised as follows:

Insurance

Self-protection through savings and/or investment

Self-protection through selling assets

Borrowing

Coping with risk events – Comparing consumers and business owners

Adults 2009 MSMEs Top 25% MSMEs Top 25% Agribusinesses

0%Not

measuredNot

measured 0%

33.9% 34.0%

37.9%

42.1%

46.3%

13.6%15.7%

13.5%

69.8%

53.3% 53.1%

11.1%

Insurance Savings and/or investmentsSell an asset Borrow

Coping with risk events – Comparing rural/urban – Adults 2009

Insurance

Savings and/or investments

Sell an asset

Borrow

0.2%

32.5%

52.0%

67.6%

0.4%

38.1%

29.7%

76.2%

Urban Rural

% adults

Coping with risk events – Comparing rural/urban – MSMEs

Sell an asset


Borrow

18.6%

33.2%

49.2%

7.4%

34.9%

58.3%

Urban Rural

% of businesses

Coping with risk events – Comparing rural/urban – Top 25% of MSMEs

Sell an asset


Borrow

23.0%

37.9%

46.4%

8.6%

37.9%

59.5%

Urban Rural

% of businesses

Coping with risk events – Comparing rural/urban – Top 25% of agribusinesses

Insurance


Sell an asset

Borrow

0.2%

42.8%

13.4%

11.3%

38.8%

14.4%

10.4%

Urban Rural

% of businesses

Coping with risk events – Comparing male/female – Adults 2009

Insurance


Sell an asset

Borrow

0.4%

36.4%

49.5%

67.0%

0.1%

31.6%

43.3%

72.4%

Female Male

% of adults

Coping with risk events – Comparing age groups – Adults 2009

18 to 24 yrs 25 to 34 yrs 35 to 44 yrs 45 to 54 yrs 55+ yrs

.2% .3% .3% .7% .0%

26.5%

35.0%38.4% 40.0%

30.6%

35.7%

48.6%52.0%

50.1%46.3%

74.8%

67.3% 66.2% 67.6%

74.9%


% of adults

Coping with risk events – Comparing income generating activities – Adults 2009

Salar

ies/

wag

es -

form

al

Salar

ies/

wag

es -

info

rmal

Agricul

ture

or fish

ing

Farm

wor

ker

2.1% .1% .1% .0%

65.7%

43.1%

31.2%

9.5%

38.4%42.2%

55.4%

29.1%

64.9%69.4% 67.5% 68.9%


% adults

Coping with risk events – Adults 2009 by total monthly income

Total monthly income

Percentage adults using coping mech

Savingstrend

Selling assettrend

Borrowing trend

Insurancetrend

Coping with risk events – Businesses by size

Micro

Small

Micro

Small

Micro

Small

33.8%

46.9%

37.8%

41.8%

41.8%

55.2%

13.4%

25.3%

15.5%

19.9%

13.5%

14.2%

53.3%

50.1%

53.4%

44.0%

11.2%

6.0%

0.00186017306673469

0.00705174738152028

Borrow Sell an asset Savings and/or investments Insurance% of businesses

All MSMEs

Top 25% MSMEs

Top 25% agribusinesses

Coping with risk events – Comparing types of MSMEs

Traders

Service providers

Traders

Service providers

34.5%

31.7%

39.2%

33.2%

13.8%

12.4%

16.6%

12.3%

53.7%

51.5%

55.3%

45.1%

Borrow Sell an asset Savings and/or investments% of businesses

All MSMEs

Top 25% MSMEs

Food crop producers

Cash crop producers

Livestock producers

Processor businesses

.2%

.2%

.1%

1.7%

43.1%

42.6%

50.5%

56.2%

13.4%

12.7%

25.0%

10.1%

9.0%

13.1%

18.5%

17.1%

Borrow Sell an assetSavings and/or investments Insurance

% of businesses

Coping with risk events – Comparing types of agribusinesses – Top 25% of agribusinesses

Coping with risk events – Comparing businesses by annual turnover

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

All MSMEs

Top 25% MSMEs

Top 25% agribusinesses

Annual turnover

Savingstrend

Selling assettrend

Borrowing trend

% businessesusing coping

mech

Annual turnover

Annual turnover


Coping Strategies – Multiple income sources, Saving,

BorrowingGroup membership

Is the way individuals and business owners cope when risks events occur proactive or reactive?

The way individuals and business owners respond to questions regarding the way they cope financially when risk events occur often creates the perception that they lack coping strategies. The FinScope, MSME and AgFiMS data however provides evidence to the contrary.

Most adults have multiple income sources to mitigate risk

Savings behaviour is, to a large extent, driven by the need to mitigate risk

Membership of groups is, to a large extent, driven by the need to have quick access to money (either in the form of savings or loans) in times of financial difficulty

Coping strategies – Multiple sources of income

All adults

Adults with salaries/wages - formal

Adults with salaries/wages - informal

Farmers

Farmworkers

Business owners

53.5%

55.6%

67.9%

56.8%

44.0%

63.1%

58.5%

69.9%

68.5%

61.2%

31.7%

79.9%

Percentage of adults with multiple sources of income


Coping strategies – Saving – Adults 2009

TotalSalaries/wages - formal

Salaries/wages - informal

Agriculture or fishing

FarmworkBusiness owners

Rural Urban Males Females

% Savers 69.0% 89.4% 71.2% 72.8% 45.0% 79.9% 70.9% 63.6% 71.9% 66.3%

Save for meeting household needs when have little or no money

70.3% 72.4% 68.6% 71.6% 53.4% 69.0% 70.5% 69.8% 70.3% 70.3%

Save for emergency (burial, medical)

62.3% 64.0% 64.4% 61.3% 45.6% 71.0% 61.6% 64.5% 61.8% 62.8%

Save for education of self, children or siblings or others

26.4% 37.7% 26.4% 26.0% 19.2% 31.8% 27.0% 24.4% 28.6% 24.3%

Save for later in life/old age

20.9% 31.1% 23.2% 19.3% 20.6% 26.1% 20.0% 23.5% 23.4% 18.4%

% of savers saving to cope with risks

Savings behaviour of most savers is driven by a need to mitigate risk

Coping strategies – Borrowing – Adults 2009






% Borrowers 9.4% 27.1% 12.3% 7.4% 11.4% 12.1% 9.1% 10.4% 9.9% 9.0%

% of borrowers borrowing group to cope with risks

For meeting day to day expenses

27.0% 21.3% 22.9% 32.4% 11.1% 20.6% 26.3% 29.0% 25.8% 28.2%

For burial expenses1.9% .6% .3% 3.9% 3.1% 2.5% .6% 1.9% 1.9%

For medical expenses

12.0% 3.8% 8.5% 16.7% 13.0% 13.0% 12.5% 10.5% 10.5% 13.5%

For education fees 15.4% 32.3% 14.4% 9.7% 9.2% 15.9% 14.0% 22.1% 8.7%

Borrowing behaviour is driven by a need to mitigate risk

Coping strategies – Multiple sources of income






% Group members 20.8% 34.5% 28.5% 19.1% 8.2% 29.7% 19.6% 24.1% 18.9% 22.5%

To help when there is a death in the family

53.6% 48.5% 45.5% 57.5% 88.3% 37.7% 55.5% 48.9% 62.1% 47.0%

To help when there is another emergency

53.0% 50.8% 46.5% 55.3% 44.7% 42.4% 53.4% 52.0% 51.3% 54.4%

Because you could not get money or help anywhere else

3.7% 5.9% 1.6% 4.3% 13.3% 1.9% 3.5% 4.3% 3.6% 3.8%

To get money easily when you need it

11.4% 13.2% 13.4% 10.5% 9.2% 10.3% 12.5% 8.3% 11.4% 11.4%

Lend money out to members who borrow when the needs arises with little or no interest added

23.2% 25.9% 15.1% 29.1% 23.6% 22.1% 28.4% 10.9% 25.3% 21.6%

Raise the money needed for funerals

53.4% 52.4% 42.1% 57.3% 88.3% 39.3% 55.1% 49.6% 62.2% 46.8%

Raise the money needed for other emergencies

44.0% 42.3% 39.4% 45.6% 30.1% 33.0% 44.0% 43.9% 48.8% 40.3%

% of group members belonging to group to cope with risks: Reasons for joining

% of group members belonging to group to cope with risks: Services provided by group joined

Group membership is a risk mitigation strategy for most members


Yakini Capacities Assessment Model applied to identify attributes

associated with being insured:

• Individual/business owner attributes• Household/business attributes

• Community/external factors/attributes

Title over

Significant determinants of insurance uptake

Determinants of insurance uptake

Individual/ Business

ownercharacteristi

cs

Household/ Businesscontext

Community context

• Household or business owns insurable assets:

• Adults – Colour TV, DVD player, car/other vehicle, computer

• Businesses – buildings, machinery/equipment, vehicles

• Agribusinesses – tractors• Individual has a regular income (either

as main or secondary source of income) and has

• Achieved higher levels of education

Based on the FinScope consumer, FinScope MSME and the AgFiMS data, individuals or businesses with insurance have

the following characteristics that distinguish them from those

without insurance

New Opportunitiesfor Insurance?

New insurance opportunities?

From this analysis, the following main conclusions can be drawn:

Those who are insured have traditional insurance products They are distinguished from the uninsured by the following attributes:

They are from a household owning insurable assets or they own a business with insurable assets

They have at least one regular source of income They have achieved at least some level of secondary school education

Finding individuals with similar characteristics would therefore represent opportunities for insurance service providers.

However, from the analysis it seems clear that this would not necessarily represent a significant market for service providers in Tanzania:

Less than 4% of uninsured adults receive salaries/wages from the formal sector, 13% from the informal sector

Only 14% of uninsured adults have achieved secondary school levels of education

Only 13% of uninsured adults have a colour TV, 7% a DVD player, 1% a computer/laptop, 2% a car

Insignificant proportions of businesses (MSMEs and agribusinesses) own insurable assets


The currently uninsured manage their risks through

Self-insuring by means of saving or investing in assets to sell at a later stage

Borrowing

In terms of risks, this analysis has illustrated that the main risks to consider are:

Loss of income through death/illness Medical expenses Weather-related risks that affect agricultural activities Theft

To enter the market, insurance providers will have to demonstrate the benefit of insurance above the current coping strategies being used. They are however faced with the challenge of insuring “traditional risks” at a premium that is cheaper and in a manner that is more attractive/beneficial to consumers than current coping strategies being used.

The challenge lies in designing new insurance products that address the risks faced by individuals and business owners

in a manner that is cheaper to the consumer than borrowing or self-insuring, and

that would mitigate the financial impact of the risk ,even if only partially

Profits for service providers with such an approach would be volume driven


The insurance challenge does not lie in finding a channel /points of distribution but rather in the design of an appropriate affordable product

Although ownership of mobile phones was still relatively low in 2009, more than 70% of adults had access to a mobile phone

70% of agribusiness owners have access to a mobile phone

74% of MSME business owners have access to a mobile phone

More than 90% of consumers are within an hour’s walking distance from a market

analysis of insurance and coping mechanisms: finscope tanzania (2006 & 2009), finscope tanzania...

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