SME Insurance in the Second Most Underinsured Country in the World

Can Digital Channels Make a Difference?

India is the second-most underinsured country in the world with an insurance gap of $27 billion (approximately Rs 1.98 lakh crore). It is not surprising that SMEs across the country are underinsured or are not insured at all.

Most of the SME units across India do not have proper disaster protection, or take the right policies. As awareness on insurance is very limited, the penetration of insurance products is also poor.

Adequate Business Insurance is required to secure the long-term objectives of the businesses. Buying insurance for any small business, whether a one person working from home or a small number of employees based in separate working premises, can be a baffling process. This leads to avoidance or in appropriate coverage.

In this scenario, significant exposure to risk remains and with a growing number of social, environmental and business risks, and with India’s economy on the rise, this insurance gap will only increase unless penetration accelerates.

SMEs should be an attractive market for insurers, commanding higher policy premiums than personal insurance. But the market is challenging, as SMEs come in all shapes and sizes and have different, and sometimes complex, needs.

They often need the personalised advice of an agent or broker, but are unwilling to pay for the premium services tailored to bigger corporate clients.

Could digital channels hold the answer?


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