The SME sector is a critical nerve centre for the Indian economy as it contributes 45% of the industrial output, 40% of exports and 42 million in employment while creating one million jobs every year. Most SMEs tend to be entrepreneurial ventures where the promoter has either invested his/her savings or borrowed money to start a new venture.
Given their relatively small financial and business size however, SMEs are especially vulnerable to risks that threaten the dream venture that they have worked so hard on to scale up. Surprisingly and according to a FICCI-KPMG report, only 10% of employees of SMEs have health cover, and only 0.1% of other core property risks like fire, marine etc. are covered. A lack of awareness, coupled with thin margins, makes insurance a low priority and so it is often neglected by SMEs. Holistic insurance protection is the need of the hour since this sector is prone to several risks including breakdown of production at the factories , third party claims, loss of stock, or demotivated or financially stretched employees.
And in all the need to protect margins, sometimes these entrepreneurs forget the basics – protecting the very asset against calamities that is their dream! Sometimes the SMEs leave insurance to the lenders that they have borrowed from in which case most of the times the covers may be lower or different than what the entrepreneur should actually have.
For some SMEs, it could be the very decision that could change their future against an unknown event! They run huge risks of fire and workplace-related accidents, besides floods during the rainy season. These risks have the potential to cripple their business.
At Prabhudas Lilladher, we actively engage with SMEs to advise them on covers and organize joint meetings with our insurance partners to advise SMEs on the optimal size of covers for their assets.
Remember, while the probability of such events may be low (and that’s why premia are also low), if it does occur, it could threaten the very existence of the enterprise.
RISE OF SME INSURANCE
SME insurance cover is now seeing a rise in India, partly driven by lenders, with respect to the products offered and the companies that offer these products. An SME Package cover gives the flexibility to combine covers of one’s choice in a single policy. The standard package policies include cover from fire and natural perils and burglary coverage.
TYPES OF BUSINESS INSURANCE
Property insurance offers you protection against risks to your business property. This includes not just your premises (office, shop, building, factory, etc.) but also the assets and equipment, machinery, appliances, etc. that you have within. The risks that are typically covered under this policy include fire, earthquakes, flooding, burglaries, theft and vandalism, mechanical and electrical failure, property loss due to accidents, etc.
Legal Liability insurance provides you cover against legal liabilities arising due to personal injury and/or losses caused to employees, customers, business partners and other third-parties. This may cover accidents that occur on the premises, as well as incidents arising out of the use of the business products and/or services.
Note that it’s important to ensure that your business insurance covers all your liability towards employees as per the Fatal Accidents Act 1855 and the Workmen’s Compensation Act 1923.
Apart from the mandatory vehicle insurance, you can extend vehicle covers to protect against vehicle damage; third-party property damage, third party injury or death and personal accident coverage for employees and passengers.
| Apart from his there are specialized insurance covers like:
1) Boiler and Pressure Plant Insurance Policy |
| 2) Marine Cargo Insurance Policy |
| 3) Group Mediclaim Insurance Policy for Employees |
| 4) Erection All Risk/Storage-Cum-Erection Policy |
| 5) Director’s and Officer’s Liability Insurance |
You don’t have to pick and choose specific types of business insurance, because most insurers offer packages that include all or most of the above.
FOCUS : GROUP HEALTH INSURANCE
Employees are an SME’s key business strength and their good health will reflect on the profitability and durability of business.
Providing enough cover so that they are mentally at peace is therefore important for entrepreneurs: access to timely and adequate medical care is the employer’s social responsibility. In addition to that, it provides the employer with tax benefits as well.
Key benefits of our group health insurance policy
- Lowers employee turnover
- Discount in renewal premium for claim-free experience with family members
- Lower premium costs
The policy can be tailor made to suit the requirement of a group.
Listed below are the various covers that are generally available:-
- In hospitalization expenses due to Sickness or Accidents
- Including Room, boarding Expenses as provided by the Hospital / Nursing Home;
- Nursing Expenses;
- Surgeon, Anaesthetist, Medical Practitioner, Consultants, Specialist Fees;
- Anaesthesia, blood, Oxygen, Operation theatre Charges, Surgical Appliances, Medicines and drugs, diagnostic Materials and X-Ray, dialysis, Chemotherapy
- Pre Hospitalization Expenses
- Post Hospitalization Expenses
- Domiciliary Hospitalization Expenses
- Day Care Treatments
- Cashless claims across network hospitals
- Tax benefits
- Regular health check-ups
The employer can also add a family floater clause for ensuring employee’s peace of mind.
ADVANTAGE EMPLOYEES
For employees, there are several advantages over Buying an individual policy, which are:-
- Lower Premium Costs
- Customized Policy
- Cover for all members
- Cashless Claims across Network Hospitals
- Provides Incentive for having affiliation with the group
- Cover From day One of member joining the group.
The premium for the policy would depend on the following parameters:-
- Size of the Group
- Profile of Members e.g. Occupation, Age, Annual Income etc
- Benefits opted
If you are a small business and looking for advice on the optimal coverage that reduces risks to your business growth, mail us at insurance@plindia.com today and we shall carry out a no-obligation free advisory process.