Alexander Nshimiyimana, a businessman engaged in furniture making, was among those who lost valuable assets in a fire that broke out at the Gakiriro wood workshop in May. He estimates his uninsured losses at around Rwf18 million.

This was the third fire outbreak incident he had experienced. Although he had previously considered insuring his business, he was discouraged by what he saw as prohibitively high insurance premiums.

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For Charles Karake, a livestock farmer based in Gahini Sector, Kayonza District, insuring a property is not a choice, rather it must be a rational decision that anyone who owns a business should prioritize.

"On May 26, one of my pregnant cows experienced complications during delivery. A caesarean section was performed, and although the dead calf was removed, the cow died about five hours later,” he recounted.

Karake received compensation of Rwf1 million, the full insured value of the cow, on June 13.

"I immediately used the money to buy a new one. Without insurance, this would have been a total loss. Now, I feel more confident and plan to invest more in livestock. Running a business without insurance is a huge risk,” he said.

The farmer pays a total annual premium of Rwf55,000 for each cow valued at Rwf1 million, of which he contributes Rwf33,000 while the government covers the remaining Rwf22,000 through a subsidy.

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Insurance role

Experts emphasise that it is important to insure properties, particularly for business owners who are vulnerable to risks.

"When you take out insurance, you’re essentially transferring the risk of losing your property to another party. Losses may occur due to internal issues such as mismanagement, but protection is crucial against external, unpredictable events,” said Teddy Kaberuka, an economic analyst, did f that property owners with insurance don’t lose out financially.

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According to Kaberuka, insurance doesn’t only serve the direct beneficiaries. Payouts contribute to national economic activity. In developed countries, insurance firms invest heavily in other sectors.

"When a car is damaged in an accident, for instance, the insurer not only compensates the owner but also injects money into the economy by paying garages and technicians,” he said.

Kaberuka cautioned businesses against relying on luck, saying: "You might start a business and grow its value fivefold in just two years. But one fire or another unforeseen risk could wipe it all out, bringing you back to zero or even into debt.”

As for the cost of premiums, he argued that although it might seem costly to take up an insurance policy, lack of awareness is the main reason why people don&039;t buy insurance.

"Most people are not educated about insurance; instead, they’re compelled into it, often only obtaining coverage because it’s required by the police, not because they understand the value of protection," he said.

"It’s hard to comprehend how someone could hesitate to pay Rwf2 million annually to insure property worth Rwf500 million, when a single incident could cost them everything,” he added.

Jean-Claude Rwubahuka, another analyst, echoed similar views, stating that insurance plays a vital role in reducing and avoiding risk.

He pointed out structural challenges that deter many from getting coverage.

"In cooperatives, there’s often no individual ownership of assets, and insurance decisions must be made collectively. If the general assembly does not approve, members who want insurance are left without options,”

"If you are renting a building, for example, you can’t insure it unless the owner agrees. Insurance companies can't issue a policy to someone who doesn’t legally own or control the property,” Rwubahuka explained.

"When it comes time for compensation, they can’t pay out for assets not covered under a valid policy.”

He added that new types of insurance are emerging, some of which may help bridge these gaps.

"Even if you don’t own the building, you can still insure the contents, like machinery in workshops. However, it’s more difficult to insure items such as timber, furniture under production, or sawdust, as they are considered temporary assets.”

Rwubahuka maintained that insurance policies include third-party interests in some cases.

"Take public transport, for example, drivers are not the owners of the buses, but they control the vehicle and are responsible for passengers. Insurance helps to reflect that reality,” he noted.

In Rwanda, businesses have access to a range of insurance products, including fire insurance, motor insurance, agricultural insurance, construction risk cover, and liability insurance, among others.