The Determinants of Insurance Firm’s Profitability in Tanzania: An Empirical Investigation

This paper sought to analyze some of the supposed determinants of profitability for insurance firms in Tanzania. Though the success of insurance companies has been linked to the accessibility of financial services by various scholars, yet the way profitability of companies influence success of firms has not been well explored. To undertake the study 10 insurance companies were involved out of 25 general insurance companies operating in Tanzania for 10 years from 2008 to 2017. The data was obtained from financial statements given on TIRA Report and some of them from documentary review. The paper carried out preliminary test of panel unit root to check for stationarity of variables. The appropriate fixed and random effect model test was employed to determine the fitness of the model using the Hausman specification test. Age of the firm found to be statistically influence profit of a company at 5% level while claims cost found to be statically significant at 1% level. Size of a company was found to have no significant contribution to the firms’ profitability. It is therefore recommended that the government and the regulator should smoothen rules, regulations and procedures so that penetration of insurance business to be high and also insurance company should have proper management of claims so that they can reduce expenses and increase profit of a company.