How can lenders better protect MSMEs?
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 businesses. MSME’s 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.
Insurers have found it difficult to find partners that can aggregate MSMEs, though lenders are often the primary starting point. This brief explores, why lenders are ideally suited to distribute insurance to MSMEs, what type of risks they should cover, what role they can play in the insurance value chain, and what they need to consider when serving this market segment (as opposed to individuals and households).
- Resource type Brief
- OrganisationMicroinsurance Network
- Year of Publication2022
- Keywords MSME's, Insurance
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