**Summary:**
In response to Lok Sabha Unstarred Question No. 1345, addressed on July 28, 2025, the Ministry of Finance addressed concerns regarding insurance coverage among Micro, Small, and Medium Enterprises (MSMEs), particularly in Tier 2 and Tier 3 cities. The response acknowledges the existence of an insurance protection gap within the MSME sector, despite the sector's significant contribution to GDP and employment.
The government indicates that insurance companies offer a range of products tailored to MSME needs, including coverage for assets, legal liabilities, and employee health and personal accidents. The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that all insurers provide Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha policies specifically to cover MSME assets. Additional policies such as Money Insurance, Fidelity Guarantee Insurance, Professional Indemnity, Workmen Compensation, Public Liability, Group Personal Accident, Group Health Insurance, and Group Term Insurance are also available to MSMEs, some in digital formats.
While the government promotes digital insurance solutions for MSMEs, the specific measures taken to incentivize uptake through policy, regulatory, or fiscal interventions are not detailed in the response. Similarly, the response does not explicitly confirm or deny the existence of pilot schemes to improve the penetration of B2B insurance products in the MSME sector, nor does it outline any intentions to establish a dedicated framework or regulatory sandbox to accelerate innovation in MSME-focused digital insurance products.
Notably, the response states that IRDAI does not collect or compile insurance policy-level data specific to the MSME segment. The answer was provided by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary.
Key Entities Referenced
Ministry of Finance: A department of the Government of India responsible for financial matters.
Shri Manish Tewari: Member of Parliament who raised the question about insurance coverage among MSMEs.
Micro, Small and Medium Enterprises (MSMEs): A category of businesses defined by the Indian government, often based on investment and turnover, contributing significantly to GDP and employment.
Tier 2 and Tier 3 cities: Cities in India categorized based on population and economic activity, representing smaller urban centers compared to Tier 1 cities.
Shri Pankaj Chaudhary: Minister of State in the Ministry of Finance who provided the answer to the question.
Insurance Regulatory and Development Authority of India (IRDAI): The regulatory body overseeing the insurance sector in India.
Bharat Sookshma Udyam Suraksha: An insurance policy mandated by IRDAI to cover the assets of micro enterprises.
Bharat Laghu Udyam Suraksha: An insurance policy mandated by IRDAI to cover the assets of small enterprises.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION No. 1345
ANSWERED MONDAY, 28 JULY, 2025/SRAVANA 6, 1947 (SAKA)
Insurance Coverage Among MSMEs
1345. Shri Manish Tewari
Will the Minister of FINANCE be pleased to state:
a) whether the Government has assessed the extent of the insurance protection gap among
Micro, Small and Medium Enterprises (MSMEs), particularly in Tier 2 and Tier 3 cities, if so,
the details thereof;
b) whether the Government is aware that a majority of MSMEs remain uninsured or underinsured
despite contributing significantly to GDP and employment;
c) whether the Government is promoting the adoption of digital insurance solutions for MSMEs,
and if so, the specific measures taken by the Government to incentivise uptake through policy,
regulatory or fiscal interventions;
d) whether the Government has taken any pilot schemes to improve penetration of B2B
insurance products in the MSME sector; and
e) whether the Government intends to establish a dedicated framework or regulatory sandbox to
accelerate innovation in MSME-focused digital insurance products?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (e): Insurance companies offer various insurance products to provide coverage to MSME
segment. These products offer protection for different requirements of MSME including covers
for their assets, legal liabilities, health and personal accident for their employees etc. Insurance
Regulatory and Development Authority of India has also mandated all insurers to provide Bharat
Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha policies to cover the assets of
MSMEs. In addition to this, several other policies such as Money Insurance, Fidelity Guarantee
Insurance, Professional Indemnity, Workmen Compensation, Public Liability, Group Personal
Accident, Group Health Insurance, Group Term Insurance etc., are also offered by the insurance
companies to MSME across India. Some of these covers are also available in digital mode.
Further, the insurance policy level data pertaining to a specific segment such as MSMEs is not
collected or compiled by IRDAI.
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