What Drives the Profitability of Insurance Companies in Tanzania? An Empirical Analysis Based on Panel Data

This study examined the drivers of the profitability of insurance companies in Tanzania. Subjecting secondary data extracted from the Annual Insurance Performance Report issued by the Tanzania Insurance Regulatory Authority to analysis, the study found the sample to be unbalanced as it did from 2011 to 2020. Nevertheless, it yielded 218 firms’ year observations for analysis. Moreover, the study employed panel data regression models to calibrate the influence of the drivers on the profitability of insurance companies. The results indicate that market share and net premium significantly and positively correlated with the profitability of insurance companies in Tanzania. Furthermore, the study found a significant converse relationship between incurred claims and the profitability of insurance companies in Tanzania. Based on the research findings, the study recommends that the executives of insurance companies should expand their market share using marketing penetrating strategies to boost profitability. Likewise, they should strive to manage efficient incurred claims as they affect conversely the profitability of insurance companies.