Overview
The primary objective of a SACCO is to promote savings among its members who are drawn from a specific common bond and utilize the savings to lend out to the same members at affordable rates for reasonable and flexible repayment periods.
The extension of credit and assurances for higher returns on member's savings is the objective and ambition of every society. As members save and obtain loans from the society, it is the expectation of the society and members that the loans will be fully repaid with interest within the agreed period. The member's savings or shares and approved guarantors and even terminal benefits from the employer are the only security offered to safeguard the society's interest should the members default in repaying the loan.
Natural and unexpected misfortunes such as death or total permanent disability of members are risks not covered by the society when granting loans. Even if the society gives the matter some thought, the securities offered by the members would be rendered inadequate and inapplicable by the rule of natural justice.
Unfortunate happenings such as death or total permanent disability of members are increasingly a common experience these days.
These incidences have two major effects:-
- When some members meet with these misfortunes before the loans are fully repaid, a society will suffer loss of funds required for further credit to other members, suffer reduced profitability since part of the loan may end up being written off as bad debts.
- The total savings of the deceased or disabled member may be utilized to pay off in full or part of the outstanding loan. The dependants therefore get nothing from what their breadwinner had saved with the society.
Such experiences may discourage member's activities with the society. The experience is even more disheartening where a member is permanently disabled and the society writes off the loan from the members savings.
A wise approach to minimize the impact of such financial risks to a society would be by transferring such risks to insurers who have the means and methods of handling financial losses arising from events of this kind.
It is a co-operative insurer which has the infrastructure, experience, co-operative philosophy and understanding that effectively handles insurable financial risks associated with savings and credit societies.
CIC Insurance has responded to the insurance needs of the co-operatives and the general public in the current economic era and is committed to competitiveness in the insurance market, enhanced quality service and customer satisfaction. Among the issues addressed is the development and provision of relevant and affordable insurance packages for SACCO societies and their members.
