The fire that gutted GOICO Plaza in Musanze, destroying goods estimated at more than Rwf30 billion, has cast a spotlight on a longstanding vulnerability among small businesses: many traders operate with little or no insurance protection against disasters that can wipe out years of investment.

The blaze, which swept through the commercial complex housing Musanze Market, left traders counting heavy losses and has renewed questions about how prepared small businesses are for fires and other disasters -- and why insurance remains beyond the reach, or outside the priorities, of many.

In Kigali, Jean-Marie Habyirimana understands the risk but has made a choice familiar to many small traders.

He runs a wholesale shop opposite Kimironko Market, where cartons of merchandise fill the premises. Much of his business capital is tied up in that stock, yet he has not insured it against fire or other disasters.

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"For now, I would rather invest the money back into my business. It is not that big yet, and I do not think insurance is necessary at this stage," he said.

His reasoning illustrates the insurance gap that the Musanze fire has brought into focus. For small businesses operating on tight margins, insurance competes with immediate priorities such as rent, restocking, salaries and other operating expenses.

Also read: Musanze market fire damaged goods worth Rwf30bn, says governor

Yet when disaster strikes, the absence of adequate insurance can leave business owners facing losses accumulated over years, with limited means to recover.

The Musanze fire has therefore raised a broader question: what is keeping small businesses from protecting their stock and other assets?

Cost is only part of the problem

Marc Rugenera, Managing Director of Radiant Insurance Company, said small businesses can insure merchandise, equipment, buildings and other assets against risks including fire, theft and natural disasters, depending on the policy.

However, he said several factors keep small businesses outside the insurance system, including limited awareness, irregular incomes, concerns about affordability and the perception that insurance is primarily meant for large companies.

Rugenera cited the example of a trader with merchandise worth Rwf5 million who could lose the entire investment in a single fire. With appropriate insurance, he said, covered losses could be compensated, giving the business a better chance of recovering.

Efforts have been made to develop products aimed at smaller businesses and low-income customers.

Radiant established Radiant Yacu in 2019 to serve underserved individuals, small businesses and low-income earners through microinsurance products. The company has also introduced GAKE GAKE, an initiative allowing customers to save progressively towards insurance premiums.

But Elie Tuyizere, founder and chief executive of Cover Soko, an insurance technology company, said affordability is only one part of the problem.

"The biggest challenge is accessibility. Finding an insurer willing to accept a small premium can involve shopping around, rejections and losing a day's work," he said.

For traders whose businesses depend on daily sales, leaving a shop unattended to visit insurance companies can itself mean losing income.

Also read: Musanze market fire: 635 alternative spaces secured for affected traders

Tuyizere said insurers may also be reluctant to cover some small businesses where risks are considered high, particularly where basic safety measures such as fire extinguishers and proper electrical installations are lacking.

Digital technology, he said, could help bridge that gap by allowing traders to compare insurance options, obtain quotations, pay premiums and receive policies without having to travel to an insurer's office.

Insurance alone is not enough

Having an insurance policy does not necessarily mean everything inside a business is protected.

Andrew Kulayige, chairperson of the Association of Insurers in Rwanda and chief executive of Britam Insurance Rwanda, has urged businesses to ensure their insurance cover corresponds to the assets they want to protect.

For instance, insuring a building does not automatically cover the merchandise, furniture, computers and equipment inside it.

This distinction is particularly important for traders operating from rented premises. While a property owner may have insured the building, individual traders may still need separate cover for their stock and equipment.

Proper records are also critical

Kulayige emphasised the importance of maintaining stock registers, purchase and import documents, tax records, sales reports and accounts.

Such records can help establish the value of goods lost or damaged when a business files a claim.

Also read: Musanze market fire: Govt consoles traders, pledges support for repair

Police reports and other documentation may also be required following incidents such as fires.

Safety conditions can also determine whether an insurer is willing to cover a business and on what terms.

Faulty electrical installations, tightly packed commercial premises and inadequate fire-prevention measures increase the likelihood and potential severity of losses. Businesses may therefore be required to address some of these risks before obtaining cover.

Traders must also accurately declare the value of their merchandise.

Undervaluing stock in an attempt to reduce insurance premiums can result in inadequate compensation when a loss occurs, leaving the business owner to absorb part of the damage.

Could traders insure collectively?

For businesses that struggle to obtain or afford individual policies, collective insurance could provide another option.

Tuyizere and Rugenera said cooperatives and business associations could help traders negotiate group insurance policies, potentially reducing administrative and distribution costs while making cover more accessible.

Radiant Yacu already works with cooperatives in different sectors, including traders and farmers.

Innocent Muramira, a Kigali-based lawyer and managing partner of Muramira & Co Advocates, said the underlying problem for many small businesses remains limited capital.

Also read: Insurers pledge faster compensation after Musanze market fire

"Many small businesses struggle to meet basic expenses, with some unable to pay rent consistently for six months," he said.

Under such circumstances, he said, insurance is often treated as an expense that can be postponed rather than as protection for a trader's capital and livelihood.

Muramira said policymakers and insurers should explore affordable group arrangements and flexible payment options, alongside awareness campaigns to help business owners better understand the value of insurance.

Musanze traders begin claims process

For traders affected by the Musanze fire who had valid insurance policies, attention has now shifted to claims and compensation.

The amount each insured trader receives will depend on the type and extent of cover they held and the assessment of their losses.

In an update published on October 13, Prime Insurance urged affected clients to report their losses at its nearest branch so assessments could begin. The insurer said it would guide clients through the process and work towards prompt compensation in accordance with policy terms.

The experience in Musanze underscores the difference between insurance being available on the market and small businesses being able to access suitable cover, consistently pay for it and meet the conditions necessary to make successful claims.

Closing that gap will require action from both insurers and businesses. Insurers may need simpler products, easier access and more flexible payment arrangements, while traders need better records, improved fire-safety measures and a clearer understanding of what their policies actually cover.

Also read: Insurance should never be the last item on the budget

Cooperatives and business associations could also play a greater role by negotiating collective insurance arrangements for members who might otherwise struggle to obtain affordable individual cover.