SMEs need insurance even more
Sep 22, 2011
A stitch in time saves nine. But many micro businesses owned by our mothers, fathers, brothers in Uganda have not taken on insurance , the stitch that can save them from total loss in their businesses.
By John Odyek
A stitch in time saves nine. But many micro businesses owned by our mothers, fathers, brothers in Uganda have not taken on insurance , the stitch that can save them from total loss in their businesses.
Micro businesses are businesses employing less than five people, privately owned by sole or groups of individuals and generate low annual revenues.
David Amos a trader owning a stall in Owino Market says he does not know much about insurance. He thinks he has to pay a lot of money for insurance premiums and they does not know what insurance can do for him.
Miriam Magezi, the chief executive officer Uganda Insurers Association responds that micro insurance applies to protect businesses, such as those operated by individuals in the markets such as Owino, Nakasero and other similar establishments against specific risks such as fire, theft, crop failure, education and risk of loan repayment.
“There is the loan protection cover or credit insurance. For this product, extensions may include group personal accident, illness and funeral expenses. Other traditional covers can include burglaryâ€.
She discloses that in the case of the Owino fire the benefits the traders would have received if they were insured would include replacement of the burnt merchandise and repayment of the unpaid loan balances.
Magezi reveals that the new insurance environment seeks to see that insurance packages are affordable even by low income earners.
“Insurance premiums range from as low as 0.1% to 4% depending on the size of the risk and other underwriting considerations.
There are number of benefits, including peace of mind, business continuity, income protection, protection against unplanned for expenses as well as familyâ€.
Magezi notes that there is the general lack of awareness and low financial literacy levels. She says there is a general perception that insurance is expensive and for the rich.
She adds the majority of Ugandans still earn low incomes, which means that there is competition on an individual’s needs list.
“That same income has to meet costs of food, health, clothing, education, social contributions thus services such as insurance, though a necessity, are given last priorityâ€.
She says in Uganda social culture practises promote dependency on relatives and friends, in case any mishaps are suffered. She says the Uganda Insurers Association (UIA) is carrying out a country wide insurance sensitisation campaign on what insurance is and the key theme is that “insurance is affordable and insurance has benefitsâ€.
She says members of the UIA have been educating insurers on micro-insurance. Insurance companies have begun setting up branches up country and UIA is establishing collaboration with banks and micro finance institutions.
According to the last industry performance report 2010 released by Uganda Insurance Commission, there has been a 19% growth in insurance premium and some of the factors that contributed to growth were a marked increase in micro insurance business as well as loans protection business.
Magezi explains that for small traders to get insured and ensure their families are protected against potential loss of income they need to identify the risks they are exposed to and wish to have covered; contact an insurance company one would wish to insure with.
They have to present an insurance proposal and establish how much premium is to be paid.
George Okotha, tjhe deputy commissioner Uganda Insurance Commission (UIC) says UIC has contributed to the recent amendment of the Insurance Act, the law regulating insurance in Uganda to accommodate micro insurance.
Okotha says UIC is now working on the regulations to operationalise it.
“Once this is finished, we shall have companies dealing in only micro-insurance and this will go a long way to increase the awareness of the benefits of micro-insurance to the low-income people as they will have to market the product,†Okotha asserts.
He adds that in case of complaints on any insurance player people can contact UIC and they can mediate on the disputes through the complaints bureau.
A stitch in time saves nine. But many micro businesses owned by our mothers, fathers, brothers in Uganda have not taken on insurance , the stitch that can save them from total loss in their businesses.
Micro businesses are businesses employing less than five people, privately owned by sole or groups of individuals and generate low annual revenues.
David Amos a trader owning a stall in Owino Market says he does not know much about insurance. He thinks he has to pay a lot of money for insurance premiums and they does not know what insurance can do for him.
Miriam Magezi, the chief executive officer Uganda Insurers Association responds that micro insurance applies to protect businesses, such as those operated by individuals in the markets such as Owino, Nakasero and other similar establishments against specific risks such as fire, theft, crop failure, education and risk of loan repayment.
“There is the loan protection cover or credit insurance. For this product, extensions may include group personal accident, illness and funeral expenses. Other traditional covers can include burglaryâ€.
She discloses that in the case of the Owino fire the benefits the traders would have received if they were insured would include replacement of the burnt merchandise and repayment of the unpaid loan balances.
Magezi reveals that the new insurance environment seeks to see that insurance packages are affordable even by low income earners.
“Insurance premiums range from as low as 0.1% to 4% depending on the size of the risk and other underwriting considerations.
There are number of benefits, including peace of mind, business continuity, income protection, protection against unplanned for expenses as well as familyâ€.
Magezi notes that there is the general lack of awareness and low financial literacy levels. She says there is a general perception that insurance is expensive and for the rich.
She adds the majority of Ugandans still earn low incomes, which means that there is competition on an individual’s needs list.
“That same income has to meet costs of food, health, clothing, education, social contributions thus services such as insurance, though a necessity, are given last priorityâ€.
She says in Uganda social culture practises promote dependency on relatives and friends, in case any mishaps are suffered. She says the Uganda Insurers Association (UIA) is carrying out a country wide insurance sensitisation campaign on what insurance is and the key theme is that “insurance is affordable and insurance has benefitsâ€.
She says members of the UIA have been educating insurers on micro-insurance. Insurance companies have begun setting up branches up country and UIA is establishing collaboration with banks and micro finance institutions.
According to the last industry performance report 2010 released by Uganda Insurance Commission, there has been a 19% growth in insurance premium and some of the factors that contributed to growth were a marked increase in micro insurance business as well as loans protection business.
Magezi explains that for small traders to get insured and ensure their families are protected against potential loss of income they need to identify the risks they are exposed to and wish to have covered; contact an insurance company one would wish to insure with.
They have to present an insurance proposal and establish how much premium is to be paid.
George Okotha, tjhe deputy commissioner Uganda Insurance Commission (UIC) says UIC has contributed to the recent amendment of the Insurance Act, the law regulating insurance in Uganda to accommodate micro insurance.
Okotha says UIC is now working on the regulations to operationalise it.
“Once this is finished, we shall have companies dealing in only micro-insurance and this will go a long way to increase the awareness of the benefits of micro-insurance to the low-income people as they will have to market the product,†Okotha asserts.
He adds that in case of complaints on any insurance player people can contact UIC and they can mediate on the disputes through the complaints bureau.