Is Insurance a Necessary Evil?
I are actually experiencing an insatiable thirst to look for 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 look to break down the perception of the subject in order that 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 through the Insurance Regulatory Authority (IRA) demonstrates that the degree of uptake of insurance in Kenya is in an all-time low of 3.three percent. This can’t be compared to developed economies like South Africa in which the numbers are near 14%. Many explanations happen to be advanced to exhibit why Kenyans are nevertheless averse to trying out Insurance related products. One prominent argument would be that the Per capita income (GDP) on the average income earner is not enough to guide payment of premiums. The other school of thought would be that the savings culture of Kenyans remains wanting.
While the arguments above may hold water, the essential understanding of insurance will never be taught to the majority of us from an early on age. The subject of insurance I dare say is shrouded with many different secrecy and misunderstanding like the mysticism surrounding ancient religions. The language used continues to be rather technical to your average person. I realize that at this time I must correct myself quickly and be aware that every profession have their own language; to have an engineer has got to use engineering language, an architect precisely the same etcetera. Insurance also does have it’s language in case its proponents profess who’s benefits the majority humanity, shouldn’t you choose clothed in language this is not so grandiose but easily palatable to your common man?
The responsibility in the stakeholders within the insurance companies are to bring customers’ perception to how insurance works in a very language they are able to understand. This would entail offering an elementary insight on which informs the underwriting decisions on various insurance products by insurers. I want to suggest which it would benefit insurers to get open days where they invite people and educate them within the fundamentals of insurance, about the meaning of risk, why insurance coverage is important to any economy and above all the benefits of insurance in a personal level. Apart from honing their sales skills, sales professionals have to align themselves properly together with the market so as to understand and respond well for their customers’ needs. More often than not, sales agents are classified to be aggressive, over-achieving individuals who usually are not honest and therefore are quick to point out to clients the dotted lines inside the application document. This negative perception must stop. Insurance sales agents contribute immensely towards the overall economic growth and provide important services without which an economy cannot 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 danger of fire arising beyond man-made or natural sources e.g. lightning, subterranean fire etc, the risk of personal injury at the office owing towards the nature of employment, loss in luggage while travelling and much more. What insurance does is just to classify all these risks and price them into premiums. The premiums are then pooled which is from this pool of funds that claims are settled. The guiding principle we have found that a risk needs to be quantifiable. A close analysis of your respective immediate environment can tell you many known and unknown risks. Insurance companies manage losses that arise away from insured risks. Think briefly the costs borne through the insured if there were 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 won’t have public liability insurance, he could find it difficult to raise money in order to meet his attorney’s fees and hence might not exactly protect his business. This is because the price tag on a claim can far exceed exactly what a business is in a position to raise and necessitate the turning off of a business altogether. Many examples abound where insurance solve practical problems and mitigate many risks that will cripple businesses and slow economic growth. At a personal level, medical insurance plan is very vital. Think as it were the rising expense of Medicare and consultancy fees as well as the increasing costs of pharmaceutical medicines.
But we have an antithesis to a real healthy explanation and this also is advanced by some who conisder that risks are simply just imagined hazards. They posit that your risk is imagined and simply ceases to be a risk when a proper occurrence happens. Some even counter a proposal to try insurance dangerously by arguing they may have, one example is, not been admitted to hospital for many years and see no have to take up a medical cover. While it is essential to live healthy and steer clear of the hospital as well as its attendant costs, it will be farcical for someone to wish that they a medical cover inside face of your medical emergency.
In conclusion, insurance plan is necessary to any growing economy like Kenya in spite from the low uptake. It not simply creates employment and puts in abeyance worries of meeting risks; it is deemed an indicator of economic growth and also a sign of an thriving economy. More must be done to educate the masses with regards to this subject. The responsibility lies squarely in the court with the regulator to set pressure on insurance agencies to increase the uptake of insurance inside country. Incentives has to be given to firms that have the highest a higher level penetration to be sure they maintain their influence and widen this market. Is insurance necessary? Indeed it can be. Next time someone dissuades you from taking on an insurance plan, you better reconsider.