The COVID-19 pandemic has currently placed the world in a very disruptive era which has been described by many as the worst disruption experienced in the past 70 years.
Many agree that since the ‘great depression’, nothing like this has ever happened before.
But in the face of all this disruption and uncertainty, one thing is clear; if you have an insurance cover, your life is much easier and predictable than not having cover.
This explains why the Springboard, Your Virtual University, a radio programme on Joy FM, used last week’s edition to discuss the importance of insurance in such periods of disruption and uncertainty.
Helping with the discussion was the Managing Director of Enterprise Insurance, Mrs Ernestina Abeh, and the Managing Director of Enterprise Life, Mrs Jacqueline.
Explaining how non-life insurance policies work, Mrs Abeh, said insurance normally cover specific events and it comes with terms and conditions.
“You should understand what you are buying, what the cover offers, what are the restrictions and limitations around it. If you get that one right and you purchase it and its concluded, you have bought a peace of mind.
“You should understand the real need of insurance which is that in case of a financial loss, you are restored,” she stated.
Motor insurance policy
Giving a breakdown of how motor insurance policy work, Ms Abeh, said “when you buy third party motor insurance, what you are telling yourself is that you are just responding to what the law requires you to do that if you run into a third party’s vehicle of knock somebody down, the insurance should be able to take care of that liability of yours up to a certain amount.”
“When you buy third party fire and theft, you are saying I’m covering the interest of the third party, however I am also protecting my own asset so in case there is a fire situation or somebody snatches my car, I still have cover.
“But the full level or the comprehensive level is when you are saying that I’m covering every risk that you think of,” she explained.
The importance of brokers
Commenting on the importance of insurance brokers, Ms Abeh, said brokers were part of the insurance industry who act as intermediaries.
“The broker is an expert in insurance and he comes in as an independent party to assess your risk and then comes over to engage the insurance company, get terms for you and conclude the cover for you.
“They bring an independent view of all the things that we do and speak for the insured. When a claim occurs, the broker comes in as if they are the ones who have made the loss and engage the insurance companies to make sure you get your settlement,” she noted.
Sharing insights into life insurance, Mrs Jacqueline Benyl, said life insurance was very improvement to the financial wellbeing of every individual.
“If you have life insurance, you are creating a certain safety net such that if any unfortunate event happens, you can fall on your life insurance to give you that piece of mind and support you during that hard times that you are going through.
“Life insurance is what everybody needs, but nobody wants and this is because it is a grudge purchase.
“People cannot see it so think it’s not important. There is also the fear factor which makes people think buying life insurance means they are anticipating something bad will happen,” she explained.
Insurance penetration rate
Ms Benyl bemoaned the low insurance penetration rate in the country which she said was around just one per cent.
She said penetration was, however, a general problem in Africa, as Africa contributes only 1.5 per cent of the total insurance premiums generated globally.
“We can make exception for countries like south Africa who have 16 per cent penetration,” she stated.
Benefits of life insurance
Highlighting the benefits of life insurance, Mrs Benyl, said broadly, life insurance covered unfortunate events or unwanted events like death.
“It covers death, disability and the disability is in two forms which are temporal disability and permanent disability,” she noted.
When asked about how much the insured could receive when an unfortunate event happens, Ms Benyl said “for life insurance, your age is a critical component in the determination of how much you will get and that is why we shouldn’t wait to grow older before you buy life insurance policies.”
“Because the older you are, the more expensive it becomes,” she added.
Ms Benyl said, for insurers, they were in the business of paying claims and they enjoyed doing that.
“If we are not able to deliver our promise to you then there is no point being in business so we always say that in insurance, we look for reasons to pay the claim rather than reasons to repudiate the claim.
“So if we have to repudiate the claims then it means you are giving us reasons to, otherwise, we are very positioned to pay the claims,” she said.