Determinants Of Insurance Demand For Small and Medium Enterprises A Case of Mbeya City.

Tilwetwa, Willieth Wilson (2020) Determinants Of Insurance Demand For Small and Medium Enterprises A Case of Mbeya City. Masters thesis, The Open University of Tanzania.

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Abstract

This study examined the determinants of insurance demand for SMEs in Mbeya city. The specific objectives of the study were to assess how the education of SMEs owners, the income level and insurance cost influence SME’s owners to ensure their businesses. The study involved 92 randomly selected respondents and the descriptive explanatory design was applied. Moreover, the study applied quantitative methodology. Overall, results showed that only 44.6% of entrepreneurs insured their businesses. The study also revealed that 28 out of 41 (30.4%) of SMEs owners who insured their businesses terminated their insurance contract because of late compensation and high insurance charges. Moreover, the study exposed that 13% of SMEs owners were not willing to insure their businesses. The study further revealed that only 43% of respondents had knowledge on the role of insurance while 51.1% claimed that the insurance costs (charges) were too high and 61.8% agreed that the low level of income influenced the insurance demand. Based to the study findings then we conclude that, knowledge/education on insurance roles, high costs of insurance and level of income flow in business influence insurance demand for SME owners in Mbeya City. This study recommends that the insurance company and government should provide enough education to entrepreneurs on the role of insurance in reducing the business risks. Also, the insurance companies should reduce insurance costs and reduce bureaucracy on payment of insurance claims.

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