One major reason people generally do not like to buy insurance is lack understanding of what insurance is all about. You can read our piece on what insurance is and what it’s not here. There is a tendency to dislike what one does not understand, not because the thing on its own is not good but because the bias is already against the subject matter. Insurance is not immuned against such sentiment and this is broadly propagated by people who probably have never bought insurance at all. All it takes to support and believe this bias is just a testimony of one person who has had a poor experience.

In Nigeria, a layman believes insurance is about some marketers (probably new graduates desperate to get a job) given target to sweet-talk people into paying some money (premium) in exchange for a promise that they will be there for you in case of an event (risk) that may happen in the future. However, when it is time to fulfil their obligations, the company will change the story and your hard-earned money is gone and you will be on you own. While this scenario may sometimes be correct to some extent, it does not tell the whole story.

To put things in perspective, insurance is a risk transfer mechanism where a sum of money (premium) is paid in exchange for compensation in the event of a specified future occurrence (risk). With this definition, insurance should be seen from the perspective of a contract between two parties with each having its own duties and responsibilities. Prior to signing the contract, parties involved are assumed to have understood their roles, rights, responsibilities and limitations. After the contract has been consummated, it becomes binding on the parties and any breach of the defined terms of the contract could make the defaulting party liable in court especially if the party has failed in its responsibilities.

Typically, when reading terms and conditions of everyday contracts e.g. email terms and conditions, account opening forms, SIM registration form etc people simply scan through to the end of the page or last page of the document and either click agree or accept as the case may be. It is important to note here that by design, terms and conditions are printed in smaller font size than the other part of the document. That being said, the moment you click on that tiny “accept” or “agree” button, you are simply saying you have read the contents and you consent to everything contained therein. Insurance contract is not an exception from this general rule and in view of the popular axiom in law that “ignorance juris non excusat” (ignorance in law is not an excuse), it is therefore important that buyers understand what they are buying.

Insurance is a mandatory requirement in many countries as part of protecting citizens from unforeseen circumstances that may bring them financial hardship. It also helps to protect other people who may be affected by your actions or inaction. Insurance is therefore mandatory for both private and corporate entities. At the personal level, it is an offense to drive a car without (at least third-party) insurance while at corporate level it is a punishable offense not to have group life assurance for employees especially manufacturing industries.

Expectedly, a policyholder is not expected to be an insurance guru before buying coverage. This is where brokers and agents come in. Brokers/Agents are insurance professionals who are trained in the field and are in the best position to advise you on what coverage is suitable for you. For a corporate organization with multiple insurance transactions, a broker will be required to help them navigate the complexities. Meanwhile, as a private policyholder with a few insurance transactions e.g. vehicle insurance, travel insurance, health insurance etc per year, an agent will suffice. They can both source for good rates for their clients to ensure they get the good covers at affordable rate. They have relationship with the insurers because they bring business to them on regular basis. In case of a claim, they can help fast-track the process and ensure clients get timely settlement.

It is understandable that buying insurance could sometimes be expensive depending on the nature, so no one wants to bring additional financial burden of hiring a broker or agent. The good news is that engaging the service of a broker or agent is free of charge and comes entirely without any cost to you. Insurance companies compensate them with commission for bringing them businesses. You might actually be helping the broker or agent to earn some money by engaging their service. They also help you understand the scope of the policy you are buying especially when it comes to understanding policy documents.

It is therefore smart to engage the service of an insurance broker or agent to take care of your insurance errands. You will have one less thing to worry about and the good thing is it does not affect your budget in any way. Should you need to talk to an insurance agent further, do not hesitate to send a mail to info@beinsurednaija.com and you will be glad you did. Remember,

Premium is the token paid to buy certainty when uncertainties happen. – Be Insured Naija

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