Why insurance is a must-have for MSMEs to secure and grow their business

The Micro, Small and Medium Enterprises (MSMEs) sector has been one of the key catalysts driving the Indian economic growth and creating innumerable employment opportunities. However, with many MSMEs bootstrapping their business, sometimes they don’t prioritize insurance. Even if they do their knowledge of insurance protection is sometimes limited to only fire cover. The MSMEs are exposed to several other risks, which may be detrimental to their very existence.

Having insurance to safeguard against these risks is vital in ensuring that the companies can get back on their feet at the earliest in the face of adversities. Insurance offers protection from sudden shocks, uncertainties and helps mitigate adverse effects on the long-term business plan of the MSME ensuring their very existence and longevity of the business.

Commenting on the need for insurance for MSMEs, Anand Pejawar, Deputy Managing Director, SBI General Insurance said, “MSMEs often faces risks such as fire, theft, workplace incidents, floods, etc. It is imperative for these businesses to avail a comprehensive insurance plan to combat the aftermath of unfortunate incidents. Further, MSMEs should ensure that they have opted for adequate insurance to avoid instances that could add a financial strain and directly impact the future of their enterprise in case of a contingency.”

SBI General has solutions to protect the assets of MSMEs from any unfortunate event of Fire and Burglary/theft and in addition to that the company is also providing risk mitigation to SMEs for their transit risk through Marine Insurance, trade receivable through Trade Credit Insurance. In addition to the product offerings for SMEs, SBIG also provides value added services by taking es care of the risk features of the units through their specialised Risk engineering team.

Another key product dedicated for this segment is the Group Health Insurance. The highlight of the product is that an MSME unit having 10 workforce / employees and more can also avail a group health insurance with all relevant benefits that are offered under the segment. The product has been around for over two years and was launched in the market post the MHA guideline issued during the first phase of the COVID induced lockdown.

Insurance penetration is seeing an uptick in this segment with many MSME enterprises now making informed choices by virtue of being more digitally connected and savvy than before. The regulator has also stated that a framework has been put in place to encourage new distribution channels for insurance to improve access to insurance.