Insurance is an arrangement by which a company, individuals or the state undertakes to provide a guaranty of compensation for specified loss, damage, illness or death in return for payment of a specified premium.
The world is full of uncertainties and risk as individuals, families, business, properties and assets are exposed to different types and levels of risks.
These include risk of losses of life, health, assets and property.
Though, it is not always possible to prevent unwanted events from occurring, world financial system has developed schemes to mitigate individuals and businesses against such losses by compensating them with financial resources.
Insurance is a financial packaging that reduces or eliminates the cost of loss or effect of loss caused by different types of risks.
Apart from protecting individuals and businesses from many kinds of potential risks, the insurance sector contributes significantly to the general economic growth of the nation by providing stability to the functioning of businesses and generating long term financial resources for the industrial projects.
Among other things, insurance sector also encourages the virtue of saving among individuals and generates employment for millions of people.
Insurance provides an ideal risk mitigation mechanism against events that can potentially cause financial distress to individual and businesses.
For instance, with medical inflation growing at approximately fifteen percent per annum, according to national health insurance scheme, it would ensure financial security for the family and create easy access to health care delivery.
Incase of business insurance, financial compensation is provided against financial loss due to fire, theft, mishap and other accidents,
Also, insurance sector generates funds by way of premium from millions of policy holders, due to the long term nature of these funds, these are invested in building long term infrastructural assets such as roads, ports, power plants and dams that are significant to nation building.
Employment opportunities are increased by big investment leading to capital formation in the economy.
The insurance sector makes a significant impact on the overall economy by mobilising domestic savings, turned accumulated capital into productive investment, enables mitigation of losses, financial stability and promotes trade and commerce activities into productive investments.
Above all aforementioned, individual, group, and family should key into insurance policy as it reduces social burden.
People should know that insurance policy is a contract used to indemnify individuals and organisations for covered losses.
Nigerians should tap from goodies of insurance as it provides a source of investment funds and also reduce the burden of uncompensated accident victims and the uncertainty of society
Government at all levels should support individuals, groups and organisations by providing them with mechanisms and facilities that would be attractive enough for people to key in to the policy.
It is imperative for the insurance companies to be fair in discharging their duties to their clients when fire accident or death occurred by paying their benefits without delay.
This will build the people’s trust and confidence in insurance policy.
Rasheedah Makinde
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