Safeguarding Your Business and Finances with Insurance

In a recent webinar discussion hosted by Olamide Olajolo, the Managing Director of Coronation Insurance Plc, the critical role of insurance in promoting financial inclusion was brought to the forefront. Moderated by CNBC Africa Anchor Wole Famurewa, the panel of experts, which included Adedeji Olowe, Founder and CEO at Lendsqr; Babatunde Akin Moses, CEO of Sycamore.ng; and Yemisi Isidi, CEO of Triift Africa, delved into the significance of insurance in protecting both businesses and individuals’ hard-earned cash.

The discussion centered on the essential role insurance plays in mitigating risks and ensuring financial stability in a volatile market where a single unexpected event could potentially wipe out a lifetime’s worth of work. By creating a pool of capital, insurance provides a safety net for those who encounter misfortune, ensuring that individuals and businesses do not have to solely rely on their savings or assets to cover losses.

Despite Nigeria’s robust economy, which boasts over 40 million small businesses contributing to approximately 84% of employment and 50% of the GDP, the low rate of insurance penetration meant that most small businesses and individuals were vulnerable to daily risks and financial setbacks. Even large, successful businesses with substantial assets and secure cash flow could not amass enough funds to cover their entire risk portfolio.

For example, securing just N250,000 in insurance coverage could safeguard against risks totaling over N1 billion. The idea of setting aside such a significant sum to cover potential losses is simply unrealistic for most businesses. This financial recklessness posed a considerable challenge to the growth and long-term prosperity of Nigeria’s small business sector.

Changing the Narrative on Insurance

To transform the perception of insurance in Nigeria, panelists emphasized the importance of providing practical examples illustrating how simple insurance products could promote financial inclusion by protecting income and investments. They also highlighted the value of insurance, particularly for businesses.

Affordable insurance products like health and life insurance for business owners, for instance, could prevent a family or a small business owner from being financially devastated by the illness of the breadwinner or sole business operator. This protection not only offers peace of mind but also ensures the continuity of businesses during difficult times.

Access to credit is a vital factor in the success of businesses across all sectors in Nigeria. Small businesses, however, often face challenges in accessing credit. Insurance can play a pivotal role in this regard. Small businesses with adequate insurance coverage present a more secure credit proposition to reputable financial institutions, such as banks and grade-A lenders. As a result, these businesses are more likely to access credit on favorable terms, which can fuel their growth and development.

Moreover, many insurance providers are capable of advising specific individuals and businesses on the risks they face. This process of purchasing insurance can serve as a powerful force for financial education in Nigeria. By deepening financial literacy, the insurance sector is not only safeguarding more businesses but also ensuring the prosperity of more families.

In challenging economic times with fluctuating exchange rates, it is crucial for businesses that rely on imported equipment, insights, or services to secure their assets at favorable US dollar values. Thankfully, technology has made accessing insurance in Nigeria more convenient and cost-effective. Many insurers offer simple and effective risk products that can be accessed through mobile apps, making insurance more accessible to both individuals and small businesses.

As insurance becomes more prevalent among the personal and small business segments, it is poised to play an increasingly significant role in driving financial inclusion, preserving wealth, and supporting long-term prosperity in Nigeria.

In conclusion, insurance is not just a financial instrument; it is a powerful tool for safeguarding businesses and individuals in Nigeria. By promoting financial inclusion, offering protection against unforeseen events, and facilitating access to credit, insurance contributes to the growth and prosperity of the nation’s economy. As technology continues to make insurance more accessible, it is essential for individuals and businesses to recognize the value of insurance in securing their financial futures.