By Finnigan Wa Simbeye
LOCAL insurance companies hope that they will get a stake in underwriting property and services being offered by multinational oil and gas exploration companies by next June.
The Association of Tanzania Insurers (ATI) Chairperson, Ms Maryanne Mugo, said low capitalisation which has kept away most local insurance firms from joining the lucrative sub sector, was now being addressed.
"Plans are underway and hopefully before the end of the first half of the year the arrangements will be in place," Ms Mugo said pointing out that the main reasons which have kept local companies away from the business include low capitalisation and lack of underwriting capacity and skills.
She said the country's insurance industry is in the process of forming a consortium to underwrite risks in oil and gas sub sector which grosses in billions of dollars due to the nature of equipment used and services provided.
"Currently a lot of discussions and lobbying are going on with all stakeholders to ensure that the local insurance industry benefits from the oil and gas sectors," Ms Mugo who is also General Manager of First Assurance Tanzania Limited, noted.
With a gross premium estimated at over 400bn/- per annum, the country's insurance industry has failed to benefit from the lucrative oil and gas sub-sector for over a decade but now stakeholders want a share of the market.
Through Tanzania National Reinsurance Corporation Limited (TAN-RE), insurance companies hope they can underwrite up to 20 per cent of oil and gas sub sector.
TAN-RE CEO, Mr Rajab Kakusa, said recently that due to the size and scale of the capital involved, the risks posed by oil and gas extraction cannot be carried by a single insurance company alone.
Given the country's lack of experience in the oil and gas sector, Mr Kakusa noted that TAN-RE has sought consultants from abroad with experience in oil and gas extraction, to help advise the domestic industry.
"Working together can enable us get a bigger stake in this business," Mr Kakusa said recently while delivering a paper on oil and gas sub-sector in relationship with insurance industry.
Experts estimate that with booming oil and gas extraction, the country's annual gross premium will peak 2trn/- in the next five to 10 years.
Recently, the government was advised to ensure the energy policy being formulated contains a clause that demands oil and gas businesses to be insured by firms registered in Tanzania.
The Commissioner of Insurance, Mr Israel Kamuzora, told this paper at the time that the strategic clause was crucial to ensure national interests were vigilantly protected.
Source allAfrica
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