Thank you again for receiving us. First, can you give us the historical background of NIC and you're the biggest Insurance company in the country, so tell us a bit more about how you started?
NIC was first established in 1963, by then it was owned partly by the government and partly by the private sector. Then in 1967 there was a general policy of Nationalization. So it was nationalized and became 100% owned by the government. That is the position to date. NIC is 100% owned by the government, and it was the sole insurance company for over 30 years.. Until when the Insurance Act no. 18 of 1996 was passed; to allow other players in the market.
You had the monopoly for nearly three decades, what has changed, how has the development of the insurance industry been since the liberalization?
NIC has played a very big role in insurance during the monopoly time. We all know the risks that insurance companies take, during that time all the risks were being taken by one company. If it was not doing so well, the insurance industry would have collapsed during the era of monopoly. Since liberalization, we have about 11 companies registered, - effectively since 1998. The biggest change has been of course, that we have lost part of our clients, that is normal, that is to be expected. The other thing is that most of the companies which have been established here are branches of companies in Kenya and Uganda which have extended their operations to Tanzania, by virtue of the market opening. Our biggest asset is that we have a very strong asset base, a very strong financial base. We are determined to remain leaders in this market.
Can you give us some insight on the different services you offer to your clients? Are there any new services you are launching? To what extent has this new competition in the market challenged you to improve yourself?
We are offering both life and non-life insurance. In the area of non life we offer all the covers available, motor, fire, marine, any type of non-life cover. On the life side we are doing the usual long term, we have the group schemes. We have special pension schemes, we have deposit administration schemes. Recently we have introduced Medical Insurance. We have just started on this product. We have livestock insurance. This is another unique product you do not find in other companies. I don't know whether in Kenya there is another company offering this. As for the challenges, they are quite many. First of all you will agree with me, that the cultural aspect of a monopolistic enterprise, and one under competition is very different. So one of our biggest challenge now is the cultural change amongst our staff. Business used to come in, you had to sit at your table, but now you have to be outgoing, you have to change your marketing. We had plan, as usual companies have plans, which was for five years 1996 to 2000. When we prepared it in 1996 we found it would be ideal to take care of the coming competition. Come year 1999, we found that well, this plan is not good for us. We have to change. So recently the board approved a completely new plan for three years, we have changed our Mission Statement, we have looked at our goals differently, and we have come up with new strategies. This plan is what we are using now.
To what extent have you changed your targeting of customers, are you more selective now, in targeting customers?
We are looking at our customers under two main different areas. We have what we call our Corporate Clients. We treat them a bit differently, and we want everybody to treat them differently. We have not really been selective. We are trying not to say "NO". Because we think this is the only company where people who want insurance and can't get it from other companies, can still get it here. We know our competitors are very selective..
At what stage are your privatization plans? By when do you think NIC will be privatized?
That is something which is just coming up. We have the PSRC (Presidential Sector Reform Commission), which is responsible for the privatization of public enterprises. We are what is called a "specified company". This means we are earmarked for privatization. We are working very closely with them on this issue, and it is a process which is just starting. We have to do all the studies and then see which one is the best way to privatize.. Meanwhile inside NIC we are all trying to see how best we should be privatized, if possible we should come up with the solution of privatization, and offer it to the government. This is the strategy.
In terms of the time by when we should be privatized, I am looking at not less than two years. | Can you give us some more figures about NIC in terms of what your customer base is, turnover, and how many staff do you have?
The total premium income for the last 3 years has been 40.2 billion Tsch - in 1997. In 1998 it went down to 36.4 billion. In 1999 last year, it went down further to 26.6 billion. The most important thing to note, is that for 1999 the total industry figure collected by the 11 companies was 35.5 billion. So NIC collected about 60% of the total premium income. On the life side, we are the only one providing life assurance. To a very small magnitude, the Zanzibar State Insurance Company is doing life. But otherwise 99% of the premium is collected by NIC. The number of our policies now - in the individual Life Policies, we have about 650,000 policies. Under the group, we have schemes which cover about 150,000 members. The most popular product is the Education Policies. People no longer like the Term Assurance, which people are paid when you are dead. Currently our number of staff is 1,400, we have 26 branches all over Tanzania, 6 in Dar es Salaam, and one branch in Zanzibar.
You are also engaged in estate investments, like construction of buildings, and residential homes. When we talked to some construction companies they said that at the moment, Tanzania's construction sector is in a recession. To what extent are you suffering from that?
We are suffering so much from that, because most of our funds we invest in real estate. We have earmarked about three projects which we thought that by now we would have completed. Two of them we have not started, and one of them is going very slowly. The Ubongo NIC building. Construction has been slow. But we are also very positive about the future. One of the problems has been the financing aspect of such long term financing facilities, they are very limited in this country. They are almost not there. Most of the banks offer short term loans, and they want cash collateral. That is another problem. Without that financing aspect, I am sure that the construction would not be as it is. I think it is going to change though. At the moment for our project at Ubungo, we are in negotiations with Citibank, and they are looking at it. That means other banks will follow.
There are a lot of changes that have happened in the sector. You had a monopoly, now you have to fight for your customers and re-positioning yourself. You might be privatized within the next two or three years. So whith all these changes, where do you see NIC in the next three or four years with regards to your position in the insurance sector?
So far we see NIC as being here for the next 20 or 30 years. We see NIC as a Private National Company in the next two or three years. Operating as a private company, but owned by the government. I believe that even the privatization process, will take into account the company should remain national. Private in the sense that the government will not really interfere in the running of the company, but they will only still hold shares, and collect the dividend. We are also thinking of opening branches in Kenya and Uganda, because we see that the competitors have come from there. So why can't we go there?
Keeping in mind that our readers are businessmen, and potential strategic partners, what would you like to tell them about Tanzania, about coming here and invest in NIC?
As far as insurance is concerned, it is almost a risk free area. The risks are very minimal. s. The risks are low, no catastrophic loss and the potential is very high. At the moment I am looking at individual policies. Because when the competitors have come in, they have mostly taken NIC clients. They have not done enough marketing, they have not done enough awareness, so there is still that market which has not been touched, which can be reached with a proper marketing strategy.
As for joining NIC, we are more than happy to have discussions with anyone who thinks they would be very good strategic partners. |
