Health insurance for the MSME workforce is key to the sector's growth story: FICCI-KPMG knowledge paper on the MSME sector

MSMEs will be contributing significantly to the GDP as well as the industrial output. In order to ensure their continued success, the key imperatives are to ensure ease of doing business, infrastructure upgradation, skilling and ensuring workforce welfare. In order to analyse workforce welfare in terms of healthcare coverage, FICCI and KPMG in India conducted a joint study covering 219 MSMEs across 15 manufacturing and services sectors.

Key highlights from the survey:

- Approximately 90 per cent MSMEs do not offer any financial aid for medical purposes to the families of employees

- Most micro and medium enterprises offer no financial support to their employees and their families

- MSMEs preferred a basic cover of personal accident and critical illness with a focus on a reduction in premiums and coverage of employees only

- MSMEs primarily prefer to purchase insurance through broking channels and bancassurance, with group health insurance penetration through online channels at minimal level of about 6 per cent.

Speaking on the occasion, Mr. G Srinivasan, Chairman, FICCI Health Insurance Committee and Chairman & Managing Director, The New India Assurance said, "The MSME sector of the country is highly under penetrated in terms of healthcare cover. Hence, this segment offers a great opportunity for the health insurance industry to expand its outreach and increase accessibility to affordable healthcare".

Speaking about the knowledge paper, Mr. Shashwat Sharma, Partner and Head, Insurance, KPMG in India said, "The Indian economy is one of the fastest growing in the world and the success of MSMEs is critical for maintaining India's growth story. A key aspect of this growth story would be providing quality healthcare access and social security coverage to the largely informal or unorganised workforce employed in this sector. This could result in significant productivity improvement in this sector. The goal of improving healthcare coverage to the MSME workforce can be fulfilled through both development of infrastructure and as well as delivering effective and affordable healthcare."

He further added, "The Government of India, the insurance regulator (IRDAI) and the insurance industry can together play a critical role in achieving this objective."

While the Government could play a pivotal role in setting up the healthcare infrastructure and incentivising group health cover adoption, the regulator could explore aspects around obligations of non-life insurers. The insurance industry could explore policy customisation, innovations in servicing and cluster based communications drives. A concerted three way approach could go a long way in realising the ambition of providing healthcare coverage to a larger population base.

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