• Insurance is a necessary investment, rather than an extra expense.
• It allows business owners to run companies without having to worry about unexpected events.
• Insurance penetration is still low because of misconceptions which hold back business owners from buying insurance products
Pensions and Insurance Authority (PIA) has called on entrepreneurs to embrace services offered by the pensions and insurance industries in order to protect and grow their businesses.
Authority Communications Manager Doreen Silungwe told Money FM News that despite insurance being very important for business sustainability and risk management, most entrepreneurs especially Small and Medium Enterprises (SMEs) do not understand the importance of insurance, while others still hold negative perceptions towards the service.
Mrs. Silungwe stated that the Authority is committed to changing this attitude and help SMEs understand the value of insuring businesses by creating a conducive regulatory environment that allows for innovative and efficient delivery of insurance services.
“SMEs need to realize that insurance is a necessary investment, rather than an extra expense as it allows business owners to run companies without having to worry about unexpected events that can slow down businesses or bring them to a complete halt when unexpected risks such as accidents, fire and theft occur. Unfortunately, the Authority has noted with concern that insurance penetration is still low because of misconceptions, which hold back business owners from buying insurance products,” Mrs. Silungwe noted.
She further called on entrepreneurs to plan for retirement and consider taking up pension plans for themselves and employees to help secure their lives after retirement.
Mrs. Silungwe also said in respect of this year’s Zambia International Trade Fair theme, which is “Promoting Value Addition for Sustainable Growth,” the Authority recognizes that pensions and insurance development is a strong predictor of economic development and contributes to value addition for sustainable growth .
“Pensions and insurance companies are institutional investors. In this role, they mobilize pension contributions and insurance premiums that lead to economic development by investing funds in productive sectors of the economy.”
“Pensions and insurance entities act as intermediaries by mobilizing and channeling savings into the domestic investment vehicles. They facilitate efficient allocation of capital resources, which in turn improves productivity and economic efficiency that results in reduced capital output ratio. The projects create economies of scale, facilitate technological innovation and specialization and thus promote economic efficiency and productivity.”
She observed that insurance promotes financial stability in the economy by insuring the risks and losses of individuals, firms and organizations and also relieves the tension and anxiety of individuals by securing the loss of their lives and assets.
“Insurance improves business resilience and productivity by providing effective risk transfer, which bolsters the survival rate of entrepreneurs. Pension schemes on the other hand assures income replacement in old age thereby reducing poverty and destitution in old age,” she stated