How can digital platforms support the distribution of MSME insurance?

Despite being heavily underfinanced, micro, small and medium enterprises (MSMEs) are integral drivers of economic growth and contribute substantially to employment and innovation. They account for 50% of global employment and 90% of all businesses2. MSMEs are also exposed to a wide range of risks. They struggle more than larger businesses to cope with these due to a combination of factors including, limited resources, an exposed environment, and a lack of skills and tools to manage them. Insurance can help MSMEs better manage risks, enable them to access a greater variety of risk management tools (including loans and savings), and give them confidence to take more productive, perhaps riskier, investment decisions.

The recent proliferation of the digital platform economy presents new opportunities to provide financial services, including insurance, to underserved segments such as MSMEs. The Microinsurance Network’s (MiN) 2020 Landscape study highlighted the opportunities in MSME insurance, as digital platforms are becoming well-established in Asia and continue to grow in Africa, the Caribbean, and Latin America. The growth potential for the African continent is particularly pronounced. Here, the Boston Consulting Group (BCG) put the likely number of jobs created by digital platforms at close to 3 million by 2025. This brief explores how digital platforms can be leveraged to help supply MSMEs with adequate insurance coverage, helping them to be more resilient to external shocks and adverse events.

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