The Small and Medium Enterprise (SME) sector is a core pillar of Singapore’s economy. They account for 99% of Singaporean enterprises and contribute about half of GDP and two-thirds of employment. Despite their fundamental importance to the country’s economy, penetration levels of SME insurance in Singapore is lower than in more matured markets. According to a recent survey, almost 10 percent of Singapore’s SMEs have no insurance at all. Moreover, more than half carry only basic, mandated levels of insurance.
We took a closer look at the state of SME insurance in Singapore to understand how insurance providers can better meet the needs of this prominent and growing consumer base. Based on our observations, some of the key reasons for the lack of insurance or under-insurance include lack of sufficient cash flow, price levels being too high, lack of awareness of risk exposures, limited customizations being available, and the perception of being a low-priority investment.
SMEs typically face challenges in complying with safety, which makes companies more vulnerable to worker injury, cyber threat, and property damage than in larger companies. Work-related risks are higher due to lack of access to expertise, information and capital investment. They are sensitive to price changes, which means price-competitiveness is crucial for insurers serving this market.
According to Netscribes analysis, the SME health and benefits market is growing at a compound annual growth rate (CAGR) of 5.8%. To capitalize on this market opportunity more needs to be done in terms of creating brand awareness and offering customizations based on the varying needs of customers.
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