Month: May 2021

Insurance a Necessary Evil?

I are actually experiencing an insatiable thirst to look for to answer this nagging question about whether insurance policies are a necessity in your country today. While the subject of insurance coverage is broad and multi-faceted, I will try to break down the perception with this subject to ensure our minds if you’ll are not engrossed with all the surreptitious picture of insurance agents’ incessantly cold-calling prospective clients or quest for claims arising outside of insurable risks by claimants.

Data from your Insurance Regulatory Authority (IRA) signifies that the amount of uptake of insurance in Kenya is in an all-time low of 3.three percent. This are not compared to developed economies like South Africa the place that the numbers are near 14%. Many explanations are already advanced showing why Kenyans continue to be averse to taking on Insurance related products. One prominent argument is the Per capita income (GDP) from the average income earner are not enough to back up payment of premiums. The other school of thought is usually that the savings culture of Kenyans continues to be wanting.

While the arguments above may hold water, the primary understanding of insurance will never be taught to the majority of of us from a young age. The subject of insurance I dare say continues to be shrouded with many different secrecy and misunderstanding comparable to the mysticism surrounding ancient religions. The language used is rather technical on the average person. I realize that at this stage I must correct myself quickly and remember that every profession have their language; on an engineer should use engineering language, an architect exactly the same etcetera. Insurance also does have it’s language but when its proponents profess it benefits the majority of humanity, shouldn’t it’s clothed in language this is not so grandiose but easily palatable to your common man?

The responsibility with the stakeholders inside the insurance marketplace is to bring customers’ perception to how insurance works within a language they could understand. This would entail offering a simple insight on the informs the underwriting decisions on various insurance products by insurers. I want to suggest so it would benefit insurers to own open days where they invite people and educate them within the fundamentals of insurance, about the meaning of risk, why insurance policies are important to any economy and even more importantly the benefits of insurance with a personal level. Apart from honing their sales skills, sales professionals should align themselves properly using the market as a way to understand and respond well with their customers’ needs. More often than not, sales reps are rated to be aggressive, over-achieving individuals who usually are not honest and so are quick to suggest to clients the dotted lines from the application document. This negative perception must stop. Insurance sales guys contribute immensely for the overall economic growth and gives important services without which an economy can’t function well.

Now to our overarching theme. Any society is fraught with risks. The risk of death by accidents, injury leading to permanent or temporary disability, potential risk of fire arising outside of man-made or natural sources e.g. lightning, subterranean fire etc, the risk of personal injury at the office owing for the nature of employment, lack of luggage while travelling and many other. What insurance does is just to classify those risks and price them into premiums. The premiums are then pooled and it’s from this pool of funds that claims are settled. The guiding principle the following is that a risk must be quantifiable. A close analysis within your immediate environment will advise you many known and unknown risks. Insurance companies manage losses that arise from insured risks. Think if you’ll the costs borne because of the insured if there were no insurance to mitigate these risks. Imagine a petrol station owner being held accountable for damage by fire as a result of his petrol station to his neighbors. If the owner won’t have public liability insurance, this individual find it difficult to raise money to fulfill his estate agent fees and hence may well not protect his business. This is because the price of a claim can far exceed such a business is capable of raise and necessitate the closing of a business altogether. Many examples abound where insurance solve practical problems and mitigate a number of risks that may cripple businesses and slow economic growth. At a personal level, medical insurance plan is very vital. Think briefly the rising valuation on Medicare and consultancy fees as well as the increasing costs of pharmaceutical medicines.

But it has an antithesis to this type of healthy explanation and also this is advanced by some who conisder that risks are simply imagined hazards. They posit that the risk is imagined in support of ceases to be a risk when an authentic occurrence happens. Some even counter a proposal to try insurance dangerously by arguing they may have, by way of example, not been admitted to hospital for many years and see no ought to take up a medical cover. While it is imperative that you live healthy and get away from the hospital and its particular attendant costs, it will be farcical so that you can wish they’d a medical cover within the face of any medical emergency.

In conclusion, insurance policies are necessary to any growing economy like Kenya in spite from the low uptake. It not just creates employment and puts in abeyance worries of meeting risks; it is deemed an indicator of economic growth plus a sign of the thriving economy. More should be done to educate the masses with regards to this subject. The responsibility lies squarely on the court on the regulator to place pressure on insurance firms to increase the uptake of insurance inside country. Incentives should be given to firms that have the highest volume of penetration to be sure they maintain their influence and widen this market. Is insurance necessary? Indeed it’s. Next time someone dissuades you from trying out an insurance plan, you better reconsider.

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