The President of the Chartered Institute of Insurance Ghana, Mr. Solomon Lartey says less than 5% of informal Small and Medium Enterprises (SMEs) in Ghana have insured their businesses.
This development, he noted, makes small businesses vulnerable to shocks such as fire outbreaks, theft, natural disasters, and accidents.
The informal sector, which includes traders, artisans, and small-scale manufacturers, accounts for a significant portion of Ghana’s employment and contributes to the nation’s Gross Domestic Product (GDP) lacks insurance coverage which exposes these businesses to substantial risks.
Speaking to The High Street Journal, Mr. Solomon Lartey said the low insurance uptake is attributed to several factors, including a lack of awareness of the benefits of insurance, financial constraints, and businesses struggling to survive their businesses due to economic factors.
Mr. Lartey also attributed the low penetration to insurance companies looking out for certain factors before allowing businesses to insure with them, he mentioned the factors such as availability of fire extinguishers in the building space, overcrowding of businesses at allocated space, and if the business has materials which are likely to catch fire.
However, he urged businesses to have a business plan and allocate some money for insurance to provide them with the necessary support when there are fire outbreaks or collapse of business.
Mr. Lartey said insurance companies have been educating SMEs in the informal sector to create awareness and emphasize the importance of insurance as a risk management tool.
Additionally, he said most insurance companies have packages which make it affordable for informal SMEs to insure their assets, adding that, payments of premium assets value are very low which makes it very flexible for traders.
He said insurance is about protecting your asset but not an investment, therefore insurance is not for withdrawal.
Furthermore, he said increasing insurance coverage among informal SMEs would lead to greater economic stability, as businesses would be better equipped to recover from setbacks, leading to increased investment, growth, and prosperity for the trade industry.
