Mr. Sanjeev Mantri – Executive Director, ICICI Lombard

1)    Why do SMEs need insurance? How do the needs of SMEs differ from big companies in terms of insurance?

MSMEs have been the backbone of Indian economy and have shown tremendous resilience even when faced with unprecedented challenges. They are the growth engine of the economy contributing to over a third of the country’s GDP.  In events of natural or business catastrophe, the economic losses faced by MSMEs far exceeds the insurance loss, making them more  vulnerable, while large corporates with their better risk practices and deeper cash reserves are able to cushion any setback. Unlike large corporations that often have the financial buffer to absorb unexpected losses, MSMEs operate with thinner margins and are more vulnerable to uncertainties.  Insurance is not just an added cost, but a crucial safeguard for business continuity of MSMEs. Moreover, they have specific needs that differ from larger enterprises. The scale of their risks might be smaller, but the relative impact can be significantly more detrimental, necessitating customised coverage.

 In today's competitive job market, group insurance policies like medical coverage are increasingly becoming a differentiator for MSMEs. While large corporations may provide these as a standard, for MSMEs they serve as a valuable tool to attract and retain talent. Experts even recommend MSMEs, particularly in manufacturing or service sectors to invest in Group Personal Accident (GPA) or Group Medical Coverage (GMC). The needs of MSMEs differ from larger companies, but insurance remains as a constant and critical aspect in ensuring overall success and sustainability. Furthermore, larger corporates with higher marketing spends, established brand visibility and resources are able to attract and retain talent, while MSMEs rely on Group Health Insurance (GHI) and value added services as a retention tool to take care of their employees.

2) What are the various products offered by you, and which one do you think is a must for SMEs? If you can elaborate?

It is pertinent to note that the MSME sector is poised as the backbone in making India resilient and progressive, propelled by initiatives like Atmanirbhar Bharat. ICICI Lombard is committed to facilitating this growth by providing innovative, research-backed financial products. We are the first in India to establish a digital platform specifically designed for MSMEs to acquire risk coverage (sme.icicilombard.com). This platform is a testament to our dedication in partnering with MSMEs through their journey towards growth and effective risk management. We have a two-pronged solution approach - one by offering a suite of products and coupled with swifter claim settlement process. Research has shown that of 62 million business owners less than 3% have SME insurance.

Recognizing the distinctive needs of MSMEs, we've launched a first-of-its-kind service enabling faster claim settlements. Through the use of AI and big data analytics, ICICI Lombard offers settlement for admissible property and marine claims up to INR 5 lakh within ten working days - ensuring swift and hassle-free claim payments. In response to the rising digital needs of MSMEs, our platform provides a range of business insurance solutions, including Group Health Insurance, Marine Insurance, Liability Insurance, Engineering Insurance, Workmen's Compensation, Professional Indemnity for Doctors, Property Insurance, and our unique Liability Floater. This comprehensive coverage offers protection against various liabilities, including cyber, employee dishonesty, director, professional indemnity or commercial general liability, making it a must-have for MSMEs and start-ups. Our aim is to empower businesses to navigate unforeseen circumstances and continue their operations smoothly, all the while maintaining a seamless digital experience.

3) Despite the number of SMEs in the country, there is a low adoption of insurance among SMEs. What are the reasons for the same?

The low adoption rate of insurance among MSMEs in India can be attributed to several factors. Firstly, there's a prevalent lack of awareness about insurance products and their benefits. Many MSMEs are simply unaware of the potential risks they face and how an insurance can help mitigate them. Secondly, the distribution reach of insurance products has traditionally proved to be inadequate, making it difficult for MSMEs to access policies. Moreover, the insurance products available often do not specifically cater to the unique risks and needs of MSMEs. This can deter them from investing in insurance. Addressing this issue requires widespread awareness campaigns that emphasize the importance of insurance in building resilience against risks. It's essential for SMEs to understand that insurance is not an added cost but a tool to safeguard their investment and ensure business continuity in the face of unpredictable events.

At ICICI Lombard, we are making concerted efforts to engage with business owners and educate them about the benefits of insurance. Last year, on International MSME Day, we launched a 360-degree #SalaamMSME campaign to celebrate the indomitable spirit of Micro, Small and Medium Enterprises. The core message of the communication focuses on celebrating entrepreneurial spirit and empowering MSMEs with comprehensive risk management solutions. Phase one of the campaign focused on awareness and phase two was all about lead generation and conversion. Once MSMEs understand that everything- from their factory to their car and phone can be insured, they will begin to view insurance not as an expense, but as a necessary measure for risk coverage. During the course of this campaign, we also collaborated with SME chambers and associations to bring about this shift in perspective, which is crucial to increase insurance adoption among SMEs.

The Company has undertaken an extensive deep dive to understand the behaviour, challenges and risk exposure faced by this sector. The study captures detailed insights into various aspects including risk perception, insurance awareness and need, insurance purchasing behaviour and factors influencing the decision. The report covers the significant sub-sectors comprising manufacturing, trade & services, BFSI, and ITES. The findings highlighted ‘accessibility to digitally purchase insurance solution’ and ‘perception related to claim settlement time’ as key barriers to purchasing business insurance.

4) How are insurers like you rethinking the SME market? Or what measures need to be taken to improve the insurance penetration among SMEs?

Addressing the under-penetration of insurance among MSMEs requires a thoughtful, multi-pronged approach. At ICICI Lombard, we are empowering this sector by adopting an omnichannel approach, using technology as a lever, with processes to enable a seamless customer journey. We are addressing the primary pain points of a complex purchase experience and a cumbersome/delayed claim settlements with end to end transactions in matter of seconds. This is ably supported with an ease of access and fairness of play in claim settlements. A crucial part of our strategy involves extensive awareness campaigns. We aim to emphasize the importance of insurance as a tool for resilience against risks rather than an expense. By engaging with business owners, we're illustrating how insurance can protect their assets.

We understand that new MSMEs - while not risk-averse - might not be fully risk-aware. Hence, our mission is to educate them on risk management, making them understand the potential risks they face and how insurance can help mitigate them. By doing so, we can contribute a substantial increase in insurance adoption among MSMEs.