Lloyd’s of London is reportedly planning to operate in Tanzania where an impending energy boom is spurring a push for insurance mergers and acquisitions.
In an interview with Bloomberg, Tanzania's Commissioner of Insurance Israel Kamuzora said that the world’s oldest insurance market has applied for an operating licence.
Kamuzora said the move underlines foreign investors’ interest in Tanzania’s insurance industry.
He said authorities are encouraging consolidation in the industry since several of the 30 insurance companies in the East African nation have limited underwriting capacity to shoulder rising risks.
According to the Bloomberg report, the Tanzanian government is encouraging mergers and acquisitions among insurers to reinforce the industry and help it cope with increased risks from the young oil and gas sector.
Kamuzora said a draft policy for insurers that will increase the amount of cash that companies will need as reserves should be ready in October. New rules will also be prepared by early next year.
“We are now talking about huge risks, especially after the extractive industry has shown a lot of potential,” the report quoted Kamuzora as saying. “So we are talking about increasing our capitalization at all levels.”
Kamuzora said insurance comprises about 1% of Tanzania’s US$48billion economy. Authorities are eyeing a 20% premium growth every year after total premiums increased by 18% in 2015, driven by medical cover and new oil and gas projects.
