Insurance's potential to revolutionize your small business during hardship periods
In Kenya's ever-changing political and economic landscape, small and medium-sized enterprises (SMEs) face various risks that could potentially threaten their survival. However, insurance is no longer a luxury but a survival tool, offering protection, preparation, and recovery during unrest or disasters.
SMEs in Kenya can access a variety of insurance products tailored to protect their operations, employees, and assets. Here are some key insurance products available:
- Group Medical Cover: This typically includes inpatient cover with tiers ranging from KES 500,000 to 10 million. Add-ons such as outpatient, dental, optical, wellness checks, and chronic disease management are common.
- Group Life and Last Expense Cover: Life cover is usually set at 3-4 times the employee's annual salary. Last expense cover ranges from KES 100,000 to 250,000, payable within 48 hours for funeral costs.
- 24-Hour Group Personal Accident Insurance: Covers accidental death, permanent disability, medical expenses, and funeral costs for employees in field roles like logistics and construction.
- Critical Illness and Disability Riders: Covers major illnesses such as cancer, heart attacks, strokes, and kidney failure, providing lump-sum payouts to cover treatment or lifestyle changes.
- Combined Business Insurance: Protects the business’s stock, equipment, furniture, and premises from risks like fire, floods, theft, riots, and malicious damage.
- Political Violence and Terrorism Insurance: Compensates businesses for damages caused by riots, demonstrations, or terror acts, increasingly important due to civil unrest in Kenya.
- Business Interruption Insurance: Covers loss of income and fixed expenses like rent and salaries when operations are halted due to covered events.
- Work Injury Benefits Act (WIBA) Insurance: Statutory cover compensating employees injured at work.
- Money Insurance: Protects cash assets if stolen from the premises or in transit.
- Fidelity Guarantee Insurance: Covers losses due to employee dishonesty or theft.
Additionally, micro-insurance products accessible via mobile platforms are emerging, providing affordable health, agriculture, and personal accident cover with premiums payable through mobile money.
The cost of these insurance products varies widely based on coverage type, number of insured lives, and risk factors. For example, group medical cover premiums lower by approximately 7% when pooling 20 or more employees and dependents. Specific business covers like combined insurance and political violence insurance premiums depend on the business size, location, and risk profile, and can vary substantially.
To help businesses choose the right insurance, the Understand Insurance platform from the Association of Kenya Insurers (AKI) offers clear guidance on available insurance products. It's crucial for businesses to understand their risks and protect themselves accordingly.
Political protests and demonstrations have led to damage for small business owners, including shattered shopfronts, stolen stock, burned stalls, and lost livelihoods. In such instances, notifying an insurance provider initiates a simple claims process, ensuring that losses are not fully borne by the business.
In Kenya's uncertain environment, insurance is more than just a luxury—it's a survival tool for small businesses.
SMEs in Kenya can mitigate potential threats to their survival by taking advantage of various insurance products, such as the Business Interruption Insurance, which covers loss of income and fixed expenses when operations are halted due to covered events. This insurance is particularly valuable in Kenya's uncertain environment where political protests and demonstrations can lead to damage for small business owners. Additionally, the Understand Insurance platform from the Association of Kenya Insurers can help businesses understand their risks and choose the right insurance products, including the Politically Violence and Terrorism Insurance, which compensates businesses for damages caused by riots, demonstrations, or terror acts, which are becoming increasingly important due to civil unrest.
