Property Owners May Miss Compensation After Election Unrest Due to Insurance Gaps

Dar es Salaam. Many property owners whose assets were damaged during the recent election-related unrest may not receive compensation, as standard insurance policies do not cover losses resulting from politically motivated incidents.

Following the general election on October 29, violent protests erupted in several cities, including Dar es Salaam, Arusha, Mwanza, and Mbeya.

The unrest led to businesses being looted, vehicles being set ablaze, and private property being destroyed during clashes between police and protesters.

Insurance operators have indicated that many affected owners would rush to their insurers seeking compensation, only to learn that their losses fell outside the scope of standard insurance contracts.

Industry experts explained that standard fire insurance policies no longer cover political riots unless clients purchase an extended Political Violence and Terrorism (PVT) policy.

"Previously, incidents such as terrorist attacks and political riots were included in fire policy coverage, but as such incidents increased globally, insurers decided that this coverage should only apply if a client acquired an extended policy," insurance industry sources revealed.

Fire policies still cover malicious damage, such as arson motivated by personal grievances or strikes involving workers with common interests, but do not cover politically motivated destruction.

In Tanzania, PVT insurance was offered during the 2015 elections due to the high risk of political unrest. However, by 2020 and again this year, such policies were not widely purchased because of limited demand and low political competition.

"This year, there was no significant political tension, so businesspeople did not seek PVT coverage. Brokers are advised to inform clients about such coverage, especially for supermarkets and other high-risk businesses in urban areas prone to unrest," industry sources noted.

Insurance companies directly handle only six percent of client interactions, leaving the majority to intermediaries responsible for educating clients about extended coverage.

Regarding life insurance, compensation would only be paid to individuals with an active policy who were killed outside the context of the protests. Individuals who participated in the demonstrations will not be compensated.

The Tanzania Insurance Regulatory Authority (Tira) confirmed that only those who purchased PVT policies would be compensated for election-related damages.

"Insurance covers risks that are unintentional and natural. Property damage during the elections will not be covered unless the affected individuals had PVT insurance," regulatory officials stated.

Tanzania’s long-standing peace and stability has made it challenging for insurers to convince clients to buy coverage against political violence.

Tira will review whether complex risks, including political violence and climate-related events, should be included in standard policies in the future.

"We have taken note of the situation and will analyse it carefully. The findings will help us advise insurance companies on designing suitable products for emerging risks," officials said, extending sympathies to those affected.

Insurance professionals urged Tanzanians to seek professional insurance advice for comprehensive coverage.

"Many people overlook the importance of professional guidance. Protection is always better than reaction, and the cost of prevention is far lower than the losses faced without insurance," experts emphasized.