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Insurance has been more city-oriented until recent times, and when it comes to the rural population of African, they were mostly out of it. However, things are primarily happening in the countryside where human life and agricultural assets and crops require protection. So, there is a tremendous scope for establishing insurance business at these places; however, it seems to happen at a slower pace.
Role of insurance in rural economy development
Is there any role insurance play in the economic development of countries like Africa?
There has been a considerable attention devoted to assessing the connection between financial market deepening and economic growth. Most of that we understood regarding economic growth were directly related to the banking systems and the securities markets, where insurance only receives a passing mention.
However, as insurance, securities markets, and business services are closely related, insurance do fulfil some different economic functions than the other financial vehicles and in turn, requires some specific conditions to flourish and contribute towards economic growth. Recently, there had been several interesting types of research which have mapped significant contributions by insurance sector to the overall economic growth of the developing African countries and the well-being of the poor rural people.
This evidence suggests that insurance can contribute materially to the overall economic growth by nurturing an environment for investment and promote an efficient mix of financial activities than what would be undertaken in the absence of any risk management mechanisms in place. This can also contribute to the enhancement of other sectors too as banking, digital finance, and other advanced financial systems.
Rural effects of insurance
Now, as the insurance sector is open to the industry providers and foreign companies, a serious attention by the government is also there on adequate coverage of rural areas too. While it remains the fact that the access to insurance coverage largely depends on the literacy level and awareness of rural people towards the advantage of it. Well-planned and highly organised efforts of dedicated private sector insurance companies are needed to yield high dividends from rural Africa in light of the below aspects.
• In the recent years, a considerable number of rural districts in African have witnessed significant prosperity and individual economic growth.
• Easy access to factual data regarding rural life has also improved significantly, which can be used in accurate and quick decision-making regarding offering apt insurance products.
• The functionaries and rural development agencies functioning in these regions can help explore the insurance business in the highly untapped rural market for mutual benefit.
The institutions focusing on developing agricultural insurance products for developing African countries can now quickly identify the best possible insurance products to suit to the population there. It is also needed to design and execute an intelligent system for deciding and collecting the premium and to make the claim settlement procedures customer-friendly and lenient.
To expedite this process, providers can take advantage of the educated and unemployed youth of these same villages by training them. Once if they start to enjoy the benefits of being covered, then it becomes much easier for the providers to expand their services to more.