Most SMEs experience walk up the hill scenes in a unsuccessful bid to secure credit because the traditional credit grantors are not particularly friendly to SMEs and this underservice replicates in insurance where the focus of brokers is keen on larger companies.
This global picture varies from countries, some very acute, some very disturbing and, generally a concern for government and financial institutions in countries where several palliatives thrown at it have defied cure.
Dr. Biodun Adedipe at a recent fora where the SME situation was in the front burner, said traditional credit grantors have not been particularly friendly to SMEs, either in terms of growth-supportive loan volumes or efficiency of loan request processing and disbursement. He takes it further to include all other finance services inclusive of insurance. “Apart from rigid approval processes, most of the credit products and other financial services offered to SMEs were not tailor-made, and also pretty expensive.”
He engraves it more by citing a UK study on SMEs which share a similarity with Nigeria but with a spike in severity in the Nigeria space. In the UK SMEs “receive merely 17% of total business loans from the banking industry , while 83% of loans go to large corporations, since banks have become risk-averse after the global financial crisis.”
While the SMEs remains the hub for growth for nations economies, its a hub of underservice of insurance and equally the space for underinsurance. The Howden of UK emphasises this further that the SME space, which accounts for close to half of GDP in advances economies, also offers huge opportunity as brokers and insurers find better ways to bring this currently underserved demographic into the cyber insurance market. Research from World Economic Forum suggests that only 25% of SMEs organisations globally have cyber insurance compared with 75% of larger firms.
