Emerging Insight: How can lenders better protect MSMEs?
20 October 2022
Micro, small and medium enterprises (MSMEs) are growth engines: they account for 50 per cent of global employment and 90 per cent of all businesses. However, MSMEs struggle more than larger businesses to cope with risks due to a combination of factors, such as limited resources, an exposed environment and a lack of skills and tools to manage risks.
In a recent briefing note, published in partnership with the Microinsurance Network, we explore 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).
One design consideration is to explore multi-risk covers, even if they offer partial cover. It may be difficult to customize products, especially bundled ones, for every client MSME of the lender. Most of the insurance providers interviewed for one of our earlier papers, Insurance for small businesses, said that a product covering multiple risks was more attractive to small businesses than single covers. And indeed, the most successful products tend to cover several risks. This does not necessarily mean very expensive covers with high benefits across all sorts of risks; even limited covers for certain risk types can be attractive to small businesses owners.
Read the brief to learn more about protecting MSMEs.
In a recent briefing note, published in partnership with the Microinsurance Network, we explore 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).
One design consideration is to explore multi-risk covers, even if they offer partial cover. It may be difficult to customize products, especially bundled ones, for every client MSME of the lender. Most of the insurance providers interviewed for one of our earlier papers, Insurance for small businesses, said that a product covering multiple risks was more attractive to small businesses than single covers. And indeed, the most successful products tend to cover several risks. This does not necessarily mean very expensive covers with high benefits across all sorts of risks; even limited covers for certain risk types can be attractive to small businesses owners.
Read the brief to learn more about protecting MSMEs.