Insurance for MSMEs : A Critical Subject Yet to Be Focused
Based on a recent national survey What MSME Wants in 2022 by SMEStreet, we came across few critical issues that are yet to be discussed seriously or considered for MSMEs. Insurance and to be particular- MSME Employee Health Insurance is a subject which need strong focus. In this report we at SMEStreet attempts to bring the attention of policymakers towards the feasibility of Insurance penetration among MSMEs.
Entrepreneurs and small and medium-sized enterprises (MSMEs) often face unique insurance needs, as they may not have the same level of resources or risk management capabilities as larger businesses. Some common types of insurance that entrepreneurs and MSMEs may consider include:
- General liability insurance: This type of insurance covers claims of bodily injury or property damage that occur on your business premises or as a result of your business activities.
- Professional liability insurance: Also known as errors and omissions insurance, this type of insurance covers claims of professional negligence or malpractice.
- Business interruption insurance: This type of insurance provides financial support if your business is forced to temporarily close due to a covered event, such as a natural disaster.
- Product liability insurance: This type of insurance covers claims of injury or damage caused by a product you sell or manufacture.
- Commercial property insurance: This type of insurance covers damage to your business property, such as your office or warehouse, as well as any business-owned equipment or inventory.
- Workers’ compensation insurance: This type of insurance provides financial support to employees who are injured on the job. It is typically required by law in most states.
It’s important to carefully review your business’s insurance needs and consider consulting with a professional insurance broker or agent to help you choose the right coverage.
Why insurance is underplayed among entrepreneurs?
There are a number of reasons why insurance may be underplayed among entrepreneurs and small business owners. Some of the most common reasons include:
- Lack of understanding: Many entrepreneurs and small business owners may not fully understand the importance of insurance or the types of coverage that are available. As a result, they may not prioritize obtaining coverage for their businesses.
- Cost concerns: Insurance can be expensive, and small business owners may struggle to afford the premiums.
- Misconceptions about risk: Some entrepreneurs and small business owners may believe that they are not at risk for certain types of losses, such as property damage or liability claims.
- Time constraints: Running a business can be time-consuming, and entrepreneurs and small business owners may not have the time to research and compare insurance options.
- Limited resources: Small businesses may have limited resources and may prioritize other expenses over insurance.
It’s important for entrepreneurs and small business owners to understand the importance of insurance in protecting their businesses against a variety of potential risks. While it may require some time and effort to research and compare insurance options, the peace of mind and financial protection that insurance provides can be well worth it.
How Insurance Products Can Benefit MSME Employers
Insurance can provide a number of benefits for MSMEs and their employees. Some of the ways in which insurance can benefit MSME employers include:
- Protecting against financial losses: Insurance can help protect MSMEs against financial losses resulting from a variety of risks, such as property damage, liability claims, and business interruption. This can help ensure the financial stability and continuity of the business.
- Attracting and retaining employees: Offering insurance benefits to employees, such as health insurance and retirement plans, can be a valuable recruiting and retention tool. It can also help improve employee morale and job satisfaction.
- Complying with legal requirements: Some types of insurance, such as workers’ compensation insurance, are required by law in most states. Obtaining the required coverage can help MSMEs comply with legal requirements and avoid fines or penalties.
- Enhancing reputation: By demonstrating a commitment to the well-being and financial security of their employees, MSMEs can enhance their reputation as a responsible and caring employer. This can improve the business’s standing in the community and help attract customers and clients.
Overall, insurance can provide important protection and benefits for MSMEs and their employees. It’s important for MSMEs to carefully review their insurance needs and consider consulting with a professional insurance broker or agent to help them choose the right coverage.
Limitations of ESIC Coverage for Blue-Collored MSME Employees
The Employees’ State Insurance Corporation (ESIC) is a social security organization in India that provides various benefits to employees, including medical and financial assistance. While ESIC coverage can provide important protection for blue collared MSME employees, there are some limitations to what it covers.
- Limited coverage: ESIC coverage is limited to certain types of injuries or illnesses that occur on the job. It does not cover pre-existing conditions or injuries or illnesses that occur outside of work.
- Limitations on medical benefits: ESIC medical benefits are limited to inpatient care and certain specified outpatient treatments. They do not cover all medical expenses, such as elective surgeries or long-term care.
- Financial assistance limitations: Financial assistance benefits provided by ESIC are limited to a certain percentage of an employee’s wages and are subject to maximum limits.
- Eligibility requirements: To be eligible for ESIC coverage, employees must meet certain criteria, such as earning a minimum wage and working a certain number of hours per week.
While ESIC coverage can provide important protection for blue collared MSME employees, it is not a comprehensive solution and may not cover all of an employee’s needs. MSMEs may want to consider supplementing ESIC coverage with additional insurance options to ensure that their employees have the protection they need.