Insurance for MSMEs

Business insurance protects a business from closing due to a catastrophic loss. Fires, floods, hurricanes and tornadoes have been the end of many businesses in Tanzania, as elsewhere. When a company carries insurance against these types of losses, closure and loss are only temporary instead of permanent

As a small business owner, you have worked hard to build your business, attract clients, and become a solid part of your community’s economic growth. You need to protect your standing, your business, and any employees you may have.  It’s wise to protect yourself and your business with the specific type and level of insurance that is appropriate. Here, we will go over what types of insurance for small business are available, what they protect, and why you might consider them.

Insurance is explained as an exchange for compensation between a business owner and an insurance company for a certain amount in a particular period of time. Insuring your business is simply preventing the business from running out of loss in case of any unforeseen event such as fire, theft or natural calamities. Once a business is insured,the insuring agent will refund the occurring loss.

Insuring your Business

Many business owners feel business insurance is an expense they cannot afford, or is a luxury for more established businesses. Although it is true business insurance can be expensive, it is an expense every business, regardless of the industry, size or length of time in existence, needs to include in its budget. The following are the basics of business insurance

Benefits of insuring your business

  • Security against unforeseen events such as theft and fire

In this, one can insure the business so as not to suffer after the effects of theft and fire. Meaning one gets a full compensation after the occurrence of such events

  • Easy ways to recover loss incase of misfortune

In this, one can insure a business so as not be affected when losses occurs. When insured, some of the losses will be paid back hence keeping your business available

  • Provides easy access to services without offering physical money at that time e.g. medical insurance

This is for other forms of insurance such as medical, in this one gets full access to medical services without having to pay a dime. Here MSMEs can be sure with the safety of their family members health when sick

  • Allows smooth growth of business without being often affected by challenges

In this the business can easily prosper without worrying of unforeseen challenges as in case of their occurrence they are all covered.

Things to consider when in need of insuring your business

  1. Type of insurance one needs to enroll into

There are several types of insurance e.g. fire, burglary and motor insurance. One needs to read carefully the benefits of each specific scheme before they are enrolled into. Insurance companies have details of each scheme.

  1. The authenticity of the insurance company

In many place there are many fake insurance agents. So before one pays for service, they should be aware of the authenticity of the company

To prove authenticity one can ask for proof of the following information

  1. Certified documents from TRA and BRELA

  2. Actual offices and premises of the company

  3. Payments receipts (This should not be the only evidence, as they can sometimes be forged)

  4. A country’s company listing or business directory to see if the company is recognized

  1. Comparison between different companies to establish which one offers many services at affordable price

Due to presence of several companies offering insurance services to MSMEs, make sure that you check for price comparison among several companies before enrolling this will help you secure the best offer.

  1. Make sure you have the necessary documents

Necessary documents mainly depend on the nature of an item/ scheme enrolled to. E.g.

  1. Registration and licensing documents

  2. Tin

  3. Original/certified documents that shows ownership and value of the property/business

Note: Documents required may vary depending on companies

  1. Insure the most important items of the business

Thou not a good idea to leave some items, but in most case one should start by insuring the most important items of the business. For example for cooking business, the first item to be insured should be the stove.

  1. Insure on the most likely calamity to occur

Although it is not easy to predict an occurrence of a calamity, but depending on the nature of business and the area where the business is placed there are potential calamities that one needs to adhere to. For example in a hotel business: Fire, theft and property are the best schemes to enroll to while for Transportation best schemes can include Property, Accidents and theft.

Basic type of insurance to MSMEs

  1. Theft

This covers the business against the effects that can be caused by the burglary of business assets

  1. Fire

This covers the insured house and contents against damage by fire

  1. Natural Calamity

In this the cover of the business is on the impact that can be caused by natural calamities such as floods

  1. Health / Medical Schemes

This form of cover can be of two forms

  1. Firstly: Provision of health service to people. In this, people can have access to medical services upon enrollment into such scheme

  2. Secondly: Cover on the overall impact that can be caused by accidents or death during or in the working environment

  1. Property

This is a form of insurance put on properties. There are different forms of that can be included in this category. These can include:

  • Marine Cargo: This policy covers the risk of loss of goods while in transit at sea by air or inland.

  • Motor:The law requires that all vehicles on public roads must have an insurance or security against liability for bodily injury to third parties.

NOTE: Any legal business operating in a country can be insured

List of Regulations Governing Insurance Services

  1. The Insurance Act, 2009

The act for establishing Tanzania Insurance Regulatory Authority; The authority has been given the power of regulating and supervising insurance business and other insurance related matters, which applies in both Mainland Tanzania as well as Tanzania Zanzibar. The board formed under this Act has the power to regulate and coordinate all insurance activities; it specifies the code of conduct for insurance business and all the necessary information required to run insurance business; while the registration authority has been given to the commissioner or deputy commissioner. The act direct that whoever establish insurance business has to be a resident of Tanzania but in case of a group at least one third of its members of the board have to be residents of United Republic of Tanzania. It establishes the procedures and documentation needed to establish insurance business and situations that lead to cancellation of a registration; it also explains about the rights of a insured third part like being insured against any liability like bankruptcy together with the rights of getting information from insurer.

  1. Micro Insurance Regulation, 2003

These Regulations applies to all micro-insurance agent and insurer dealing in general micro-insurance product or life micro-insurance product. Service under this insures hut, livestock, fishing gear, agricultural products, small business tools or instruments or any personal accident, either on individual or group basis; education, credit life, group life, family life, funeral insurance contract.

Companies offering insurance services