Small businesspeople will have access to affordable insurance cover to cushion them against future losses resulting from accidents such as fire or disasters once a new bill is voted into law.
A draft law was sponsored by the Rwanda Insurers Association (ASSAR) and the National Bank of Rwanda, which is the regulator of the insurance sector.
On Thursday, the members of the Parliamentary Standing Committee on Economy and Trade held discussions on the draft law with stakeholders so that they provide their views.
The law seeks, among other things, to accommodate the recommendations of Rwanda Financial Sector Development Program II (FSDP II) in order to have an inclusive insurance sector by developing micro-insurance products.
They include a wide range of insurance products that cover the low-income segments of the population against specific risks in exchange of regular premium payments proportionate to the likelihood and cost of risks involved, according to the Central Bank.
Speaking during the event, Peace Masozera Uwase, Executive Director at the National Bank of Rwanda’s Financial Stability Directorate said that today insurance has been largely focused on big corporate institutions or people who can afford significant insurable assets like cars or houses.
Uwase observed that small businesspeople such as those who own shops, motorcycle taxi operators, farmers and others in the informal sector will be able to insure their property, their own lives and that of their family based on the premiums that they can afford.
"So, it’s creating an opportunity for people to focus on that segment of our population that has previously not been served by the larger insurance companies,” she said.
With an insurance penetration (ratio of total premiums) of 1.7 per cent in Rwanda, Uwase said, it means that "a significant proportion of our GDP is uninsured assets”.
"We see microinsurance as a key avenue for promoting insurance and driving up that ratio to GDP,” she pointed out.
The Chief Advocacy Officer at Private Sector Federation, Callixte Kanamugire said lack of insurance coverage is a threat to business development, the lives of people and the country’s economy, citing a recent case of a fire that devastated a furniture workshop and other goods at Agakiriro business centre in Gisozi, Gasabo District.
"Many of them had no insurance, which implies that they lost their property to the fire, and regressed in terms of their wealth, as well as the country’s economy” he said.
"We should raise the insurance level so that our assets are protected against losses because that’s crucial. As there has been a boost to health insurance through community-based health insurance – Mutuelle de Santé, we should also increase insurance for other assets,” he said.
Jean Pierre Majoro, Executive Secretary of the Rwanda Insurers’ Association said that the proposed law is expected to protect and develop the insurance business in Rwanda such as setting up microinsurance.
"The impact will be huge. For instance, fire incidents that have been occurring in the City of Kigali are many. And, you realise that the victims had no insurance, yet, that (insurance against fire insurance) is cheaper as one pays Rwf1 as a premium to insure each Rwf1,000,” he said.
The micro insurance, he said, will serve about five million customers of savings and credits cooperatives (SACCOs).
"All of them need insurance, but, they largely do not access it,” he said adding that the insurance products available are not appropriate for them. If we reach them, even the penetration rate which stands at 1.7 per cent might triple,” he said.
Currently, Rwanda’s insurance sector has 14 firms of which 12 are private insurers. Their total assets are estimated to Rwf477.3 billion (or 1.8 per cent of the GDP), according to the Monetary Policy and Financial Stability Statement released in August 2019 by the National Bank of Rwanda.
As of the end of June 2019, the same publication shows total insurance policyholders stood at over 795,900, representing 11 per cent of the total adult population.