Small businesses, big opportunity for Life & Health insurers in emerging markets

Swiss Re recently supported a pioneering study entitled Too Small to Cover? Rethinking Inclusive Life and Health Insurance for Entrepreneurs in Brazil and Indonesia. Authored by Edoardo Totolo, Anindita Chakraborty, Gillous Harris, and Paul Gubbins from the Center for Financial Inclusion (CFI), their demand-side research compellingly demonstrates a clear and sizeable business opportunity to provide Micro- and Small-Enterprises (or MSEs defined as having 10 employees or less) with inclusive life and health insurance in two large markets in Latin America and Asia, despite perceptions to the contrary. 

The central argument of the paper is that insurers can innovate commercially viable insurance offerings that promote resilience, growth, and confidence among small entrepreneurs if they address barriers to uptake that include cost, trust, and complexity. Importantly, the study stresses that while the total addressable market is large, even modest adoption rates would translate into hundreds of millions in annual premiums, making the opportunity both realistic and significant. The report provides more detailed information calculating the opportunity size based on various scenarios. 

Drawing insights gathered from a survey of 1,621 MSEs in Sao Paulo and Jakarta, CFI researchers found that fewer than 5% used insurance payouts to cope with health-related shocks, and most relied on savings, loans, or making business adjustments with household and business finances intertwined. In both countries, the government offers universal health coverage and in Brazil limited life protection is also available through the government, but gaps in quality, timely access, and coverage amount have created a need for private life and health insurance. However, even privately insured MSEs often perceived policies as complex, low-value, or difficult to claim. 

Meanwhile, a substantial group of entrepreneurs understood the value of insurance and were willing to buy it. Reaching this group presents a business opportunity through tailored strategies for inclusive life and health protection. CFI authors recommend these four approaches:

1. Design products to address barriers such as income volatility due to unpredictable cashflows by offering flexible payment plans.
2. Simplify claims and build trust through clear, jargon-free policies and responsive support via human and digital channels.
3. Embed insurance in familiar platforms such as digital payment platforms, mobile banking, and e-commerce.
4. Segment and tailor outreach, focusing messaging and features on key target market segments who understand the value of insurance but remain unserved.

Commercially successful insurance products for these entrepreneurs can also enable significant social impact and support the UN Sustainable Development Goal #3 for "good health and wellbeing" and Goal #8 for "good jobs and economic growth." CFI authors found that entrepreneurs accessing life and health insurance experienced greater financial security, business continuity, and confidence. They understood that unexpected health events or emergencies would not derail their business or personal finances, allowing them to invest more confidently in expansion, innovation, and hiring, ultimately contributing to the broader economic vitality of their communities.

While many entrepreneurs recognize the value of insurance, lingering barriers—especially around trust—continue to stall adoption. At the same time, the insurance industry has a unique opportunity to lead the way by piloting innovations, testing product designs, and exploring new distribution models. If you are interested in partnering with us to unlock protection, resilience, and growth within this vital small business sector in emerging markets, please reach out to us for further discussion.