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The Pensions and Insurance Authority (PIA) has encouraged local businesses to include insurance in their financial plans as risk management is a key factor in sustaining successful operations.
(PIA) Communications Manager, Doreen Silungwe, said insurance was important in risk management and business sustainability, which must be considered in business operations.
Silungwe said this in a statement issued on Monday at the Zambia International Trade Fair in Ndola.
“Unfortunately, most local business especially small and medium enterprises (SMEs) do not understand the importance of insurance while others still hold negative perceptions towards insurance.
“Business owners need to understand that insurance is a necessary investment, rather than an extra expense as it allows business owners to run companies without having to worry about unexpected events that can slow down businesses or bring them to a complete halt when unexpected risks such as accidents, fire and theft occur,” Silungwe said.
Meanwhile, Silungwe reiterated the importance of pensions and insurance in facilitating economic development by contributing to building a strong financial market.
She said the financial sector which had three arms, namely, banking, capital markets and pensions and insurance, had an independent relationship to have a functional financial market.
“For example, through insurance, banks are able to issue loans to customers knowing that any potential risk is covered by the insurer. Pension schemes also play a role in the development of the capital markets through investments of pension contributions,” Silungwe said.
She also said the pension scheme and insurance companies play an important role in supporting sustainable economic development.
Silungwe said the pension schemes and insurance companies contributed to economic development of the country.
She said this was done by providing pensions and insurance services that supported various economic activities in commerce, tourism, agriculture, mining and manufacturing.
She said specifically, pensions contributions are pooled and invested in various economic activities.
“Insurance companies on the other hand provide various economic activities by providing risk mitigating solutions that enable policyholders with financial recourse when a claim materialises,” Silungwe said.
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