BENGALURU, IN / ACCESS Newswire / September 23, 2025 / Thinking your employer's health insurance is a given? That's far from reality for most employees working in micro, small, and medium enterprises (MSMEs) in India.
A new dataset from the National Institute for Micro, Small and Medium Enterprises (NI-MSME) reveals that less than 10% of MSMEs currently provide group health insurance coverage to their workers. Despite making up a major part of India's workforce, most MSME employees are left uninsured, especially in the informal and unorganised segments.
Why This Matters
Group health insurance is often the first and only form of health protection for salaried workers. For MSME employees, who may not be able to afford individual plans, this could mean the difference between receiving timely treatment or delaying care due to cost.
Moreover, group plans come with added benefits like no medical checks, instant enrolment, maternity cover, and mental health support. These features are often difficult to access without employer sponsorship.
What the Numbers Show
The NI-MSME data indicates a low penetration of insurance across India's 6.3 crore MSMEs, which employ over 11 crore people. Key findings include:
Less than 1 in 10 MSMEs offer any form of group health insurance
Adoption is highest in urban Tier 1 service sectors, such as IT or financial services
Manufacturing, construction, and retail sectors, where physical risks are higher, show very low coverage
Micro and small enterprises are least likely to have any insurance benefits for their staff
This stark gap means millions remain vulnerable to health emergencies, with no financial backing from their workplace.
Understanding the Coverage Gap
Category |
Coverage Rate |
Insights |
MSMEs offering group insurance |
Less than 10% |
Most policies are offered by larger, registered firms |
MSME workforce in India |
110+ million people |
Estimated across 63 million MSMEs nationwide |
Informal/unregistered MSMEs |
~90% of all MSMEs |
Typically do not offer any employee health benefits |
Penetration in formal sector |
Approximately around between 50%-60% |
Largely driven by mandatory benefits in organised sectors |
Employees covered by group plans |
Around 8-10 million employees |
Based on insurance industry estimates |
With India pushing for universal health coverage and insurance inclusion, MSMEs represent the next frontier. Policymakers, insurers, and industry leaders are now focusing on this underserved segment, recognising that health protection isn't just a big company benefit anymore but a basic workplace right.
What's Holding MSMEs Back?
There are a few common roadblocks:
Cost concerns: Small businesses often assume that group insurance is expensive or only suited for larger corporates
Lack of awareness: Many business owners aren't aware of customisable, affordable group insurance plans now available
Low digitisation: Offline MSMEs are less likely to engage with digital insurance platforms that simplify sign-ups and claims
No mandatory norms: Unlike ESIC or PF, there's no regulatory push for MSMEs to offer group health insurance
What's Driving Change in MSME Health Insurance
While most MSME workers remain without employer-provided coverage, things are beginning to shift, both in the market and in policy circles.
Insurers and fintech companies are now offering bite-sized group health insurance plans starting as low as ₹100 to ₹150 per employee per month. These plans are built for small teams, with features like zero paperwork, instant onboarding, and customisable add-ons such as OPD coverage or teleconsultation.
On the policy front, the IRDAI has urged insurers to design simple group products specifically for micro and small businesses. Some state governments are also exploring incentives such as GST waivers or partial premium contributions to make it easier for MSMEs to offer these benefits.
The aim is clear: make health insurance easier, more affordable, and more relevant for the MSME workforce.
How It Affects MSME Employees
If you work for an MSME and don't have employer-provided insurance:
Talk to your employer about affordable group options
Check if your MSME is registered on Udyam for eligibility under bundled schemes
Explore personal or portable health insurance plans if group cover isn't available
The Road Ahead for Group Health Insurance
For employers
Now's the right time to explore flexible, affordable group plans. Many insurers offer zero paperwork, instant onboarding, and coverage tailored for small teams.
For employees
If your workplace doesn't offer group coverage, start the conversation. Group health plans are typically 20%-30% cheaper than individual policies and come with added perks like maternity cover and no waiting periods.
The new data sheds light on a major gap in workplace health benefits across India's MSME sector. With millions of workers still uninsured, there's an urgent need to rethink how health protection is offered in smaller businesses.
Fortunately, the landscape is shifting. Digital platforms, simplified group products, and policy support are making it easier for MSMEs to offer meaningful coverage. For both employers and employees, this is a chance to move toward better workplace security, one plan at a time.
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SOURCE: Acko
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