Insurance vital for SMEs to manage risk

INSURANCE is a vital risk management tool for the small to medium enterprise (SME) sector, Bank of Papua New Guinea Governor Loi Bakani says.
He said this would sustain small businesses in the event of a disaster.
“Like this year with the coronavirus situation, they can close down but can continue after getting insured, they get their claims back,” he said.
Bakani noted that hopefully the loan facility of K200 million given by the Government to Bank South Pacific, National Development Bank and the Department of Commerce to assist the SMEs would be used by the SMEs to pay their premiums.
“But it will be in a form of a loan from those financial institutions that can include a cover or insurance policy for those SMEs,” he said.
“We (BPNG) are putting together a credit guarantee scheme for the SMEs also which will cover lending from the K200 million, so if they borrow the K200 million, it can be covered also with the credit guarantee that we will be providing.
“We are hoping to launch the facility next year.
“We are working on the final parts of it in terms of what guarantees we will be providing to the financial institutions who are lending out to SMEs.”
Bakani said awareness was one of the strongest things to convince the SMEs to take up insurance policies.
“The issue of affordability is there,” he said. “Most of the financial institutions have lending facilities for SMEs.
“So if they can borrow to pay their premium then that’s the easiest way out.”