Bridging the SME Insurance Gap in India – A Conversation with Probus and SMEStreet

Introduction: 

Small and Medium Enterprises (SMEs) are the lifeblood of the Indian economy, driving innovation, employment, and growth. Yet, a significant portion of these vital businesses remains uninsured, leaving them vulnerable to a myriad of risks. To shed light on this critical issue and explore pathways to greater insurance penetration, SMEStreet.in recently sat down for an exclusive interview with two prominent figures in the industry: Mr. Santosh Sahoo, Vice President of SME Insurance at Probus, and Mr. Faiz Askari, Founder-Editor of SMEStreet.

In this insightful conversation, we delve into the current landscape of SME insurance, the persistent barriers to adoption, and innovative strategies being deployed to build awareness and offer tailored solutions. Mr. Sahoo shares Probus's unique approach and future vision, while Mr. Askari provides context on the importance of this segment for national economic stability. Read on to understand how collaborative efforts are shaping a more secure future for India's SMEs.

The Interview:

Q1. Can you give us an overview of the SME insurance landscape in India—what is the current market size, and who are the key players dominating this space?

Mr. Santosh Sahoo: Small and medium enterprises (SMEs) are critical to India’s economy as they form a big part of the gross domestic product (GDP) and employ a large number of people. However, the penetration remains weak due to the lack of awareness, cost sensitivity, and limited access to customized solutions. Though there are no official figures regarding the penetration of SME insurance in India, a ballpark number could be around 5-10 percent of owners who have SME insurance in India. Some of the important products that are demanded by the SMEs are property insurance, liability insurance, workmen’s insurance, and group health insurance, among others.

Q2. Despite the increasing risks SMEs face, insurance penetration remains alarmingly low. What are the main barriers preventing SMEs from adopting insurance policies, and how can this be addressed?

Mr. Santosh Sahoo: Indeed, there are still several reasons why insurance uptake among SMEs in India is still somewhat low: lack of knowledge and understanding, financial concerns, perceived complexity, and administrative load. One can handle this issue in numerous ways. Policies must first become simpler. Digital revolution and government programs aiming at promoting insurance purchasing ought to get more importance. Furthermore, for the Indian SMEs, there should be economically priced and flexible educational programs and strategies. These steps can all significantly improve the financial stability and risk-reducing capability of SMEs, hence supporting India's economic growth.

Q3. With over 85% of Indian SMEs reportedly lacking even a single insurance policy, how critical is it to build awareness, and what strategies could help boost education around insurance in this segment?

Mr. Faiz Askari: Protection of SMEs, one of the main economic backbone of our nation, depends on raising awareness. Without knowledge, SMEs are vulnerable and endanger local businesses and livelihoods. To streamline insurance benefits, the local trade bodies could first provide seminars with actual case studies. All other parties including insurance players should start regional-language video commercials stressing reasonably priced solutions like shopkeeper's policies. Trusted by SMEs, banks might include insurance education into loan applications. Especially WhatsApp, social media could provide interesting risk-related infographics.

Q4. As India’s IT and digital economy grows, how are products like cyber insurance evolving to meet the specific needs of small and medium enterprises in this space?

Mr. Santosh Sahoo: The IT and digital economy of India can enable small and medium-sized companies to expand rather rapidly. Still, many small firms lack insurance, and ransomware and data breaches are becoming increasingly regular. Cyber insurance is evolving to fit small businesses' needs with choices created particularly for them. Certain insurance companies offer reasonably priced cyber insurance covering data breaches and business interruptions. Small and medium-sized companies (SMEs) depend on tailored solutions at reasonable rates since they enable them to preserve their operations and expand in India's digital revolution. Unaccepted cyberattacks have the potential to collapse India's economy, so we must prioritize information and accessibility.

Q5. Which types of insurance policies are currently seeing the most traction among SMEs—such as property insurance, group health, or term life—and why?

Mr. Santosh Sahoo: Yes, there are a large number of segments that are seeing traction in the SME industry. To name a few, there is a lot of demand for employee benefit products such as group health insurance and group personal accident insurance due to the retention tool for talent coupled with tax benefits and, in some cases, mandatory requirements in a few states for the companies. Another policy in demand is property insurance for the frequent fire incidents or natural calamities and securing loans, and D&O policy for directors and key officers from personal liability for decisions made in their official capacity. This covers legal expenses and settlements in lawsuits. Other policies include public liability, cyber insurance, and marine insurance sought after by the SME companies.

Q6. How is Probus uniquely positioned to address the challenges of low insurance awareness and adoption among SMEs in India? Could you share any initiatives or partnerships underway?

Mr. Santosh Sahoo: Probus adopts a strategic and tailored approach to overcome the challenges of low insurance awareness and adoption among SMEs in India, particularly through initiatives such as a localized approach for Tier 2 and 3 cities, workshops for partners, weekly product training and claim assistance, and personalized post-sale service. To give a short example, Probus has developed a comprehensive digital infrastructure, including CRM systems, AI-powered chatbots, API integrations, and a ticketing service for query resolution. This ecosystem streamlines operations, improves customer experience, and makes insurance more accessible and manageable for SMEs. As said, we also conduct regular workshops to educate and empower our partners, equipping them with the knowledge and tools to effectively communicate the value of insurance to SMEs and foster stronger outreach.

Q7. Under your leadership, what are some key milestones Probus has achieved in the SME insurance segment, and what does the roadmap look like for the next 2–3 years?

Mr. Santosh Sahoo: Probus has transformed the SME insurance landscape by expanding our product, placement, and underwriting teams; upskilling our underwriters; and focusing on all lines of business, such as property, engineering, liability, and employee benefits. We’ve prioritized pre-sales activities and ensured queries are resolved within defined turnaround times, building trust and accessibility in Tier-2 and Tier-3 markets. Looking ahead, our vision for the next 2–3 years is to protect over 10 lakh SMEs across India, upskill our partner network, distribute all SME retail products through seamless mobile and web platforms, and leverage an AI bot for underwriting queries, ensuring a hassle-free experience for all.