Issued by: ByDesign Communications
The Covid-19 pandemic has made African consumers more aware of the need to protect themselves against risks – like illness, accidents, and even death – in a time of crisis, but they do not always know how to plan for it.
Allan Lwanga, chief executive of the microinsurance company aYo Uganda, said that while consumers were becoming more knowledgeable about financial products like insurance, many had given up their insurance policies at the height of the pandemic because of financial stresses, leaving themselves even more exposed.
“Covid has shown us that a crisis can happen at any time, and we need to be prepared. But we saw many people who earn an income on an irregular basis having to choose between paying their premiums or buying food for their families. As a result, those who could least afford it were left even more vulnerable,” said Mr Lwanga.
Numerous studies have shown that people with low incomes are more vulnerable to economic shocks and financial risks. Events like loss of employment, illness or disability, or the death of a family member can affect a households’ ability to meet their financial obligations and debts. In many cases, these shocks can shift them to below the breadline.
There is increasing recognition that access to and usage of quality and affordable financial services products play an important role in reducing inequality and poverty. Insurance requires a regular manageable payment and, in turn, protects people with low incomes and those working in the informal economy against risks and unforeseen expenses like hospital bills, funeral expenses, etc.
“Insurance is not a savings tool. But it can certainly help consumers prepare for risks. By making room in their budgets for affordable life cover or hospital cover with a reputable insurance company like aYo, that they can access through their mobile phones, they will be in a better position to weather economic shocks,” said Mr Lwanga.
Having insurance also means consumers will be less reliant on their communities to support them when accidents or illnesses occur. Accident and illness cover can be used to pay medical bills and even make up for lost income if consumers cannot work as a result of illness, providing them with a safety net that is 100% reliable.
“Covid-19 has shown us that there are millions of Africans who would benefit from having insurance. As we emerge from the pandemic, we are seeing consumer incomes bouncing back, and more individuals taking out insurance with small premiums. As long as people have an income, it will need protecting,” Mr Lwanga said.
