Page 26 - The Insurance Times February 2025

MSME Insurance

MSME

Insurance:

Simplified Paresh Nath Karmakar

Retired DGM(IS):
United India Insurance Co. Ltd.
Ex-Faculty Member: National Insurance
Academy, Pune and College of Insurance,
Insurance Institute of India, Kolkata

As per MSME Ministry data, there are about 6.3 crore MSMEs in India, which provide employment
to approximately 11.10 crore and contribute to about 27% to the country's GDP, which is again
45% of the manufacturing output and over 40% of both direct and indirect exports.

M icro, Small and Medium Enterprises (MSMEs) The location of these enterprises includes rural and
are key components of every economy. The
semi urban cities. The location makes the business suscep-
tible to various risks like Fire, Flood, Storm, Earthquake,
MSME sector generates lakhs of employment
the country. and significantly contributes to the GDP of Burglary etc. It is to be ensured that these business models
are risk free and under insurance coverage and help sustain
business.
As per MSME Ministry data, there are about 6.3 crore
MSMEs in India, which provide employment to approxi- Insurance coverage in this sector is way behind and enter-
mately 11.10 crore and contribute to about 27% to the prises require insurance coverage as a safety net for their
country's GDP, which is again 45% of the manufacturing business to withstand business risk and remain resilient to
output and over 40% of both direct and indirect exports. unannounced dangers that often hamper running enterprises
which are operating often on lesser financial strength. A
Criteria for classification of MSMEs enterprises: report by the National Institute for Micro, Small and Me-
dium Enterprise (NI-MSME) reveals that less than 10% of
i) A Micro enterprise where the investment in Plant and
Machinery does not exceed Rs. 1crore and turnover these enterprises have adequate insurance coverage, leav-
does not exceed Rs.5 crore. ing them vulnerable to various risks.
ii) A Small enterprise where the investment in Plant and Insurers have the onus on them to create more acceptable
Machinery does not exceed Rs.10 crore and turnover and affordable insurance-based products that can cover dif-
does not exceed Rs.50 crore. ferent risks. But various reports say insurance coverage is
iii) A Medium enterprise, where the investment in Plant less in this sector as many enterprises are not aware of
and Machinery does not exceed Rs.50 crore and turn- various insurance covers that are available. Besides, they
over does not exceed Rs. 250 crores. have a lack of trust in insurance. This skepticism may be due

24 February 2025 The Insurance Times