Insurance Policy in Cameroon: Functions and Importance of the Insurance Industry. Six Tips When Getting Insurance in Cameroon.
The relevance or importance of insurance in Cameroon cannot be overemphasized.
Nevertheless, Cameroon is one of the few countries globally that is somewhat reluctant to embrace insurance. We see insurance as an unnecessary expense, which we can well do without. The average Cameroonian is prepared to repair any damage to his vehicle and avoid the ‘hassle’ of purchasing an insurance policy.
What is Insurance?
In simple terms, insurance is a contract or agreement between the proposer (Insured) and an insurance company (Insurer), in which the insurer agrees to compensate the Insured (for a token fee known as a premium), in the event of loss, damage, death or injury to them, their property or that of a third party.
From the get-go, you need to know that insurance is not a tangible service; it is intangible. Alternatively, it is not physical or seen.
Insurance is an Intangible Service
Because insurance is an intangible service, it is regarded by some as one of the most challenging things to sell. The only time insurance becomes ‘visible’ is in the event of a loss, in which case a claim is initiated by the policyholder, and it is assumed that the terms of the insurance contract are upheld by the insurer.
Because insurance is intangible, some people are reluctant to purchase it. But insurance plays a significant financial role that cannot be over-emphasized. Hence you must have at least one insurance policy to protect you against an unforeseen loss.
Insurance Policy in Cameroon: Functions and Importance of the Insurance Industry
So, having that in mind, here are five significant reasons why you should purchase an insurance policy in Cameroon (functions and importance):
1. Insurance helps you save money
At the beginning of this article, I did mention that when you purchase an insurance policy, you end up saving money. I’m sure your thinking, ‘how am I saving money when in actual fact, I’m spending it by buying an insurance cover.’
The answer is simple when you purchase an insurance policy, you buy it for a small fee (premium), compared to the extent of risk the insurers are taking on your behalf.
Let me explain by a simple example. If you decide to insurer your brand new car for 5,000,000 FCFA, the standard premium rate is 10%. Therefore your premium will be 500,000 XAF. If the vehicle is stolen due to unforeseen circumstances, your insurers are obliged to pay the sum of 5,000,000 FCFA, less the applicable policy deductible of 10%.
Hence the likely final settlement will be 4,500,000 FCFA. So, for your premium of 500,000 FCFA, you have saved 4,500,000 FCFA.
Insurance transfers the financial responsibility from you to your insurer. After all, if you had not insured the vehicle, you would have borne the cost of replacing it with your own finances. Now that’s what I call saving money!
2. Insurance is a risk transfer mechanism
An insurance policy guarantees that the unforeseen loss associated with risk is transferred to your insurer from you, the insured/policyholder.
In simple terms, once you have taken up an insurance policy, you are inadvertently shifting the risk of a loss occurring from you to your insurer. This will give you peace of mind and the assurance that you will be secure financially in a loss.
3. Protection against unforeseen losses
No one knows what will happen to either them, their loved ones or their property from one moment to the next. With insurance, you are protected against unforeseen losses and assured that in the event of damage, injury, or death, your claim will be settled in line with the contract signed by you and your insurers.
Just as was mentioned before, the money you would have spent repairing or replacing a lost or damaged item will no longer be borne by you. Hence you have the freedom to put your finances to other use. In effect, insurance reduces your financial risk in the event of an unforeseen loss.
4. Compulsory insurances
There are several insurances in Cameroon that are compulsory. This means that any persons, groups, or organizations that do not have mandatory insurance can be prosecuted and face huge fines or even jail time if caught.
Below is a list of insurances that are compulsory in Cameroon:
Motor: third party liability insurance
Every vehicle driver and vehicle owner in Cameroon must have this insurance. It covers against liabilities such as damage to property, death, or injury of a third party due to the use of the insured vehicle.
Employers liability insurance
This law states that every business in Cameroon employing at least 3 persons must have insurance that will compensate their workers in the event of death, injury, or sickness during their employment.
Builders liability insurance
This insurance is for contractors and owners of more than two stories buildings. It compensates construction workers on building suites against death or injury.
Occupiers liability insurance
This compulsory insurance is for owners or occupiers of public buildings, such as hotels, offices, residences, and so on, if users of such places are injured or die or the building collapses.
Employers liability insurance (group life)
Businesses employing at least 4 persons are required to have this insurance. It covers injury, death, or illness while in the insured's employ.
Healthcare professional indemnity insurance
It is not yet required by law that all healthcare professionals and institutions have this insurance cover.
5. Insurance ‘understands’ your needs
Having an insurance cover basically meets your needs. You need to have insurance for your vehicle to protect you from unforeseen losses.
Six Tips When Getting Insurance in Cameroon
Now you know 5 reasons why you must purchase an insurance policy; I want to provide you with a few tips on how to go about it.
- Be sure to purchase an insurance policy if you have a vehicle owner or occupy a building, employ at least 3 people, are a contractor or builders.
- Ensure you do thorough research on the various insurance policies available before deciding which policy(s) to take up.
- Confirm which compulsory insurances apply to you to avoid disobeying the law.
- Yes, Cameroon is becoming of age; you can get quotes on the internet for your insurance. However, I would advise you do it the old fashion way by visiting your nearest insurance company and getting a quote from them.
- A word for the wise, make sure the insurance company you are purchasing your policies from can settle your claim in the event of a loss. In other words, search the internet for their claims settlement data. Trust me, an insurer that can’t settle a claim of 500,000 FCFA will definitely be unable to determine a 5,000,000 FCFA.
- Take up a policy you can afford while at the same time one that meets your insurance needs.
Read Also: Top Insurance Companies in Cameroon.
Now you know why insurance is critical, hence the urgent need for you to take up an insurance policy. My advice is to go out and get one as soon as possible, you won’t regret it.