SME Insurance: Luxury or Essential?

Small and Medium-sized Enterprises (SMEs) play a pivotal role in the Indian economy and are aptly called India's 'engine of growth'. If one simply looks around, one would witness a silent SME revolution happening in India. Right from local general stores, local family businesses, to medium-size businesses, SME's have been on the rise and have slowly and steadily become the backbone of the Indian economy. However, in spite of the remarkable growth that it has showcased in recent years, the SME industry faces a number of challenges that hinder it from reaching its full potential.

One such challenge is its vulnerability to uncertainty or unpredictable events such as natural calamities, riots, etc. SMEs lack the luxury of resources and financial muscle to quickly recover from unforeseen events that large companies possess. SMEs are mostly entrepreneurial ventures where the promoter has invested his lifelong savings or borrowed exorbitant amounts of money from creditors. Therefore, without the financial security of insurance, the possibility of a natural calamity, riot, political unrest, or any malicious act can leave question marks on the bare survival of the organization.

In spite of this scenario, the subject of Insurance often brings out an indifferent response from SMEs. Most consider it a superfluous expense forced upon them by banks, while others view it as an expense that is more of a luxury rather than a necessity. Lack of insurance awareness, price sensitivity, and trifling profits makes insurance the last priority for SMEs.

Insurance instills confidence in SMEs so they can focus on their business activities with the knowledge that their assets are covered against any uncertainty. It empowers companies to function without bothering about probable losses or legal liabilities. Still not convinced about the importance of SME Insurance? Let’s breeze through a list of reasons why SME Insurance can be a game-changer:

To sum up, in spite of the rise of SME insurance products and the flexibility of customizations available, insurance is still an under-penetrated product in the SME sector. It’s safe to conclude that insurance is absolutely critical, especially for the SME industry and it can offer the peace of mind needed to keep small and medium businesses in business.