The Commissioner for Insurance, National Insurance Commission, Mr. Sunday O. Thomas, has advised small and medium enterprises not to consider including insurance as one of the items to downgrade in the line of costs reduction.
Mr. Thomas gave the advice at webinar organised by Access Bank Plc and Coronation Insurance Plc, as part of its socially responsible investment, at the presentation of the bancassurance deal they have secured for customers, corporate customers, especially, SMEs. The theme of the recent webinar, the first in the series was, “Managing Risks At A Time Of Uncertainties,” and the CFI said, the time of uncertainty is not only the time to keep insurance contracts running, but to purchase all necessary insurances.
The Commissioner for Insurance, who was represented by his technical adviser, Mr. Taiwo Babalola Adeoye, said when SMEs are streaming the rationality paradox, which focuses on costs reduction, care must be taken not to take insurance off the shelf as one of the items to be axed. According to him, what could be gained by reducing cost could be more in terms of what the company could loose.
“We could reduce cost, but not in terms of insurances; we should ensure that all our assets are adequately insured,” he advised. He said the SMEs that are in the bancassurance loop have secured double barrelled services on offer. “Aside keeping deposits in the bank, the partnership advises on protecting your assets that generate the funds with insurance.” He said SMEs cannot afford to leave their assets unprotected by insurance because when the uncertain event happens, the assets they depend on to generate fund would be impaired and this could cut off the stream of funds.
Thomas said insurance is one of the antidotes against vulnerability, which if it is not in place, could derail the affected company’s objective. “We all know the vulnerability of business to shocks and stress, majorly from external environment. It has become so prominent that if we don’t have reactions to them and be proactive at the same time, we might not be able to get the desired result as an entity.”
He said the place of insurance should be secured despite the contrary global economic reports where the economies of several countries have witnessed unprecedented downturn, and statistics have shown that there is going to be sharp and declining tendencies in GDP.
In the local scene, he noted that the #EndSARS protests, significantly affected and interrupted so many businesses. Also peculiar to Nigeria is the double indices “that could affect our economy, one is inflation and second is the recession.” These two, he said, could affect businesses, though differently, but still not a justifier to downgrade the importance of insurance protection.
While endorsing the bancassurance deal of Access Bank and Coronation Insurance, Thomas said the involvement of the National Insurance Commission is to continue the drive to have a broad range of financial services which will culminate into synergy between the bank and insurance industry. He also noted that the bancassurance model will enlighten the customers on necessity of insurance services and those products they need to have, to keep their businesses protected at a time of uncertainty.
Expressing profuse approval of the partnership between two companies, the CFI said the Commission expects similar partnerships coming after, adding that bancassurance deals align with the campaign of the Commission in terms of financial education and inclusion.