CONTRIBUTION OF FIRE INSURANCE TO THE GROWTH OF BUSINESSES IN KENYA

Abstract

Purpose: Loss of business because of fire damage can be financially debilitating. This damage can be difficult to recover from and the business owner may face a financial crisis. Nevertheless, cushion-like fire insurance can help can increase the ability of business owners to rebuild their businesses after experiencing fire damage. The purpose of this research work was to examine how fire insurance contributes to the growth of businesses and make recommendations for Kenyan business enterprises.  This study therefore highlights the key opportunities and advantages that business owners in Kenya can utilize to grow their businesses when they have a working fire insurance.

Methodology: A desk-study method was adopted. Relevant book references and journal articles for the study were identified using Google Scholar. The inclusion criteria entailed papers that were not over five years old.

Findings: This study found out that having fire insurance is a key contributor to the growth of businesses. Fire insurance can help businesses to recover the cost of expensive business equipment. These include business buildings, machinery, furniture, electrical fittings, inventory, and other accessories. This is beneficial because the business owners can repurchase and restock the business as needed. This study concludes that fire insurance is useful to businesses as the security provided by the insurance motivates business operators to invest more into the business, creating more revenue for the economy.

Recommendations: The study recommends business owners in Kenya insure their business against fire and have working fire prevention measures on their business premises. The study also recommends business owners have a solid and practical disaster recovery plan. The purpose of a workable disaster recovery plan is to minimize financial losses, maintain the continuity of operation, ensure the integrity of data and restore normal operation in a timely and cost-effective manner. The study also recommends the establishment of a strong relationship between insured and insurers to enhance the fire insurance penetration in the business community. Awareness programs, public education, government involvement, encouragement for risk assessment, and risk-based premiums at affordable rates are some of the approaches that can be utilized to increase fire insurance penetration in the business community.