Overcoming the challenges encountered by construction industry SMEs in using insurance

Abstract

Abstract The construction industry is arguably one that exposes the most people to uncertainty and danger, while insurance is considered to be the backbone of risk mitigation for many other industries. Insurance itself is a very subjective and complex method of risk management which has its own flaws but can turn out to be very useful in appropriate circumstances. The aim of this research study is to evaluate the ways of overcoming the challenges encountered in using insurance schemes by small and medium enterprises in the construction industry. Quantitative research design was adopted for this research study and the questionnaire was well structured to retrieve the necessary information from respondents. Factors obtained from reviewed literatures were structured into the questionnaire for respondents to rank using a 5-point Likert scale. Government construction officials, Consultants, Contractors and insurance organisations were chosen as respondents for this study based on their familiarity with insurance administration in the construction industry. Analysis of data retrieved was done using mean item score and Kruskal-Wallis H-test. Findings showed that SMEs needs continuous training, paying attention to details of the insurance policies and thorough risk assessment in order to overcome the challenges encountered with the use of insurance schemes. The study concludes that SME’s are faced with the challenge of having leadership with little or no education concerning insurance policies thereby resulting in not knowing how best to minimize chances of risk fruition or how to get the best insurance policy covers.