Insurance in an Uninsured Economy

Over 80 million Nigerians are not covered by any kind of insurance policy at all. There are many reasons for this position. These include low disposable income, religious and cultural beliefs, inadequate awareness, level of education, and a lack of understanding about the concept of insurance.

Uninsured businesses face varying risks and as such, they require better mechanisms to mitigate these risks as an alternative to the informal arrangements used; such as savings, ‘ajo’, ‘esusu’ and so on. Not only does insurance serve as risk mitigation, but it is also a vital tool for growth and should therefore be an integral part of every individual’s and business’ financial planning. Insurance helps ensure financial security and shields an individual or business from unplanned expenditure in the event of an unforeseen circumstance, which can result in the loss of income and ruin future financial plans.

SMEs have been described as the ‘backbone’ of the economy. They contribute quite significantly to the country’s Gross Domestic Product (GDP) and provide employment. Their continued survival is therefore key to the economy.

Considering the volatility of Nigeria’s business environment, every business should take it’s financial planning and management very seriously. A lack of proper financial planning and management – of which a very important part is insurance, is one of the many reasons why Small and Medium Enterprises in Nigeria fail. Insurance creates sustainability for companies, being that SMEs generally are unable to afford large losses caused by business interruptions, closures, and loss of income. Businesses are exposed to different risks that they must protect themselves from, to avoid losing valuable funds that could be otherwise channeled into growth.

Some of these risks include but are not limited to:

- Loss or damage and theft to office equipment.

- Damage to stock and materials in the trade including raw materials, work in progress, and finished goods.

- Provision of inadequate services or advice that may cost money.

- Damage to third party owned assets in the course of business.

Thankfully, AXA Mansard Insurance has developed the Business Insurance Plan, which aggregates various risks that businesses are exposed to and provides one simple, all-encompassing cover that addresses all these risks.

To access this plan, head to alpherwoman.com or reach out to AXA Mansard on 0700 AXA MANSARD or fipartners@axamansard.com.