Health, economic, and social catastrophes, including Covid-19 expose the vulnerability of individuals, families, businesses, economies and nations to unforeseen risks.
On a positive note, more people now acknowledge the benefits of insurance when faced with such adversities. A recent survey by the Geneva Association, a global think-tank, shows that 40 per cent of retail customers consider their health and health insurance more since the onset of Covid-19.
Similarly, half of the small business owners have made insurance, including medical schemes for employees, a priority.
These are interesting insights, considering insurance is often not a priority for many people, including business owners. The perception of insurance as an unnecessary expense is a hindrance to the uptake of underwriting products compared to affordability. But this is mostly due to a lack of information about the benefits of insurance.
The fundamental goal of insurance is to provide financial protection against life’s misfortunes. It helps individuals and organisations to plan better for the future.
Rather than focus on the monetary cost of the insurance cover, one ought to consider the negative consequences of not having it like the inability to recover a stolen or damaged asset. Insurance involves more than just managing life’s risks.
Other benefits include enhancing the ability of the insured party to cope with the shocks of loss of life, ill-health and property, thus increasing their financial resilience. There is also a savings aspect to insurance since it entails putting aside some cash as consideration for financial compensation in the event of an accident or other insurable risk.
We must get rid of this mentality that insurance is money down the drain if the insured risk does not occur since it prevents people from buying insurance even when they can afford it.
At AAR Insurance, we focus on the value underlying an insurance product from the perspective of the client’s life, health, and business. In the case of families, medical cover means preventing a financial disaster due to illness and the stress of fundraising to pay hospital bills. For businesses, medical insurance for employees ensures staff can access quality healthcare.
For small businesses, insurance may be used as a security for loans, thus acting as a guarantee to lenders. For professionals, an indemnity cover protects them from legal risks in cases of damages awarded by a court for negligence and other claims.
The writer is the MD, AAR Insurance Kenya