Knowledge and attitude on uptake of fire insurance amongst small and medium enterprise owners in Uganda: a case study of Kampala Central Business Town

Abstract

Fire insurance is a contract of insurance against the loss or damage by accidental fire or other occurrences customarily included under a fire policy. It is one of the most important insurance covers for a business that allows smooth continuation of the flow of operations even after loss from fire and yet uptake of fire insurance policies is still very low in Uganda The main aim of the study is to examine the extent to which knowledge, attitude and other factors contribute to the uptake of fire insurance among SMEs in Uganda. This quantitative cross-sectional study involved distribution of 246 sets of questionnaires to respondents who were business owners in shops Kampala Central business town. Univariate analysis, cross tabulations and logistic regression were performed on the variables in the study using STATA. Results from the study showed that education level was the only demographic factor that had a significant effect on the respondent’s uptake of fire insurance with below high school having a p- value of (p=0.038) and high school level(p=0.004) at a 95% confidence interval of [0.077,0.612] . The odds of having a fire insurance policy was 0.245 times lower among respondents who finished below high school and 0.217 times lower among respondents who finished at high school level in comparison to those that finished above high school, meaning that respondents that finished above high school had a higher probability of acquiring a fire insurance policy than those that didn’t. The variable that tested for respondents’ belief in the worthiness of a fire insurance policy produced a p value of (p=0.0026) when tested in relation to uptake of fire insurance policy. It was also seen that the odds of having a fire insurance policy was 2.156 times higher among respondents that found fire insurance policies worthy in comparison to respondents that didn’t. The researcher therefore concluded that one’s education level and attitude was most likely to influence their ability and willingness to take up a fire insurance policy. The rest of the demographic factors hardly have an effect on uptake of fire insurance Therefore, the need for sensitization and education of masses on various aspects within the insurance sector, and this knowledge will instill some confidence within Ugandans so that they can take up fire insurance policies. The government should also set up policies that require mandatory fire insurance policies by every business in order to mitigate loss from peril