SDG 8: Decent Work and Economic Growth and SDG 9: Industry, Innovation & Infrastructure
SDG 8 is the only SDG where insurance is explicitly mentioned and SDG 9 is closely linked to SDG 8.
In developing economies where SMEs play a key role as economic drivers, insurance is instrumental for increasing business resilience, spurring business investments and, thereby, contributing to enterprise growth. Covers such as fire, flood and business interruption insurance can sustain their ability to continue operating and paying their employees through financial difficulties.
Insurance facilitates access to credit so that businesses, whether a shipping conglomerate or a mom-and-pop shop, could invest in more assets, technology and R&D, which allows them to innovate, update and expand their business and, consequently, create new jobs.
Insurance firms also themselves create jobs, generate revenue and contribute to economic growth. They can ensure decent employment for their employees, agents and brokers. In inclusive insurance initiatives, insurers often rely on community organisations and representatives to promote and educate on insurance. This creates training and income-earning opportunities.
Considerations for supervisors
Empowering MSMEs to cover their insurable risks contributes to a healthier MSME sector, which has a large aggregate positive impact on the economy as a whole, and impacts the social protection of a significant segment of society. The sheer number of MSMEs and people involved in them makes them a significant element in inclusive insurance market development. The regulatory framework influences the provision and uptake of insurance in a number of ways:
► MSMEs can be made a clear target segment of the national inclusive insurance framework and definition, which allows the incorporation of elements of the regulatory framework specific to the needs of MSMEs. Furthermore, explicit industry encouragement related to insurance offerings for MSMEs on behalf of the supervisory authority can be an important incentive for insurers to take the first steps in covering MSMEs’ needs.
► MSMEs should benefit from strong consumer protection. Microenterprises in emerging markets often do not have the financial skills to fully understand their risks or the technicalities of insurance policies.
► Regulatory requirements affecting MSME access to insurance should be proportionate to the nature, scale and complexity of the business. Leveraging the right distribution channels can reduce the cost of sales, allowing for the provision of more affordable products at scale. Allowing innovation in distribution can stimulate this, and new opportunities can often be found in the wider value chains in which MSMEs work.
► MSMEs need broad, affordable and streamlined products. Insurers need to have the ability to provide such products in innovative ways.
A2ii work on SDG 8 and SDG 9
♦ Supporting responsible MSME insurance, Consultation Call (Supervisory Dialogue) available in English, Spanish and French.
On this call, we explored what MSMEs are and why they are important. We talked about the risks that MSMEs generally face, how they manage them, and their insurance needs. The resulting report attempts to establish some characteristics that an effective MSME insurance product should have and presents findings for supervisors on their role in supporting and overseeing the MSME insurance market.