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Insurance a Necessary Evil?

I are actually experiencing an insatiable thirst to get to answer this nagging question about whether insurance plans are a necessity in your country today. While the subject of insurance policies are broad and multi-faceted, I will try to break down the perception on this subject to ensure that our minds for just a moment are not engrossed with all the surreptitious picture of insurance agents’ incessantly cold-calling prospective clients or search for claims arising away from insurable risks by claimants.

Data on the Insurance Regulatory Authority (IRA) demonstrates that the level of uptake of insurance in Kenya reaches an all-time low of 3.three percent. This are not compared to developed economies like South Africa the spot that the numbers have reached 14%. Many explanations are actually advanced to exhibit why Kenyans are nevertheless averse to taking on Insurance related products. One prominent argument could be that the Per capita income (GDP) from the average income earner can not be enough to back up payment of premiums. The other school of thought would be that the savings culture of Kenyans is wanting.

While the arguments above may hold water, principle understanding of insurance is not taught to a lot of of us from a young age. The subject of insurance I dare say continues to be shrouded with many different secrecy and misunderstanding similar to the mysticism surrounding ancient religions. The language used remains to be rather technical for the average person. I realize that now I must correct myself quickly and be aware that every profession have their language; for the engineer should use engineering language, an architect the identical etcetera. Insurance also has its own language however if its proponents profess so it benefits most of humanity, shouldn’t it’s clothed in language which is not so grandiose but easily palatable towards the common man?

The responsibility on the stakeholders inside the insurance marketplace is to bring customers’ perception to how insurance works in a very language they’re able to understand. This would entail offering a fundamental insight of what informs the underwriting decisions on various insurance products by insurers. I want to suggest which it would benefit insurers to own open days where they invite people and educate them within the fundamentals of insurance, around the meaning of risk, why insurance plans are important to any economy above all the benefits of insurance with a personal level. Apart from honing their sales skills, sales professionals must align themselves properly together with the market so as to understand and respond well thus to their customers’ needs. More often than not, sales agents are rated to be aggressive, over-achieving individuals who usually are not honest and therefore are quick to point out to clients the dotted lines within the application document. This negative perception must stop. Insurance sales agents contribute immensely on the overall economic growth and provide important services without which an economy can’t function well.

Now returning to our overarching theme. Any society is fraught with risks. The risk of death by accidents, personal injury leading to permanent or temporary disability, the chance of fire arising from man-made or natural sources e.g. lightning, subterranean fire etc, the risk of personal injury at the work environment owing towards the nature of employment, decrease of luggage while travelling and much more. What insurance does is actually to classify the aforementioned 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 this is that a risk ought to be quantifiable. A close analysis of the immediate environment can tell you many known and unknown risks. Insurance companies manage losses that arise away from insured risks. Think as it were the costs borne from the insured if there seemed to be no insurance to mitigate these risks. Imagine a petrol station owner being held answerable for damage by fire due to his petrol station to his neighbors. If the owner doesn’t have public liability insurance, he might find it difficult to raise money to satisfy his hips and hence might not exactly protect his business. This is because the money necessary for a claim can far exceed that of a business is in a position to 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 policies are very vital. Think briefly the rising price of Medicare and consultancy fees let alone the increasing costs of pharmaceutical medicines.

But it comes with an antithesis to this kind of healthy explanation and this also is advanced by some who reason that risks are simply imagined hazards. They posit that your risk is imagined and just ceases to be a risk when a genuine occurrence happens. Some even counter a proposal to consider insurance dangerously by arguing they’ve, as an example, not been admitted to hospital for several years and see no should take up a medical cover. While it is essential to live healthy and steer clear of the hospital and it is attendant costs, it might be farcical an excellent wish that they a medical cover inside the face of any medical emergency.

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