The global insurance market for small and medium-sized enterprises (SMEs) is on track to see significant growth, projected to rise from a valuation of $22.8 billion in 2023 to $39.35 billion by 2032, according to Market Data Forecast. This growth represents a compound annual growth rate (CAGR) of 6.25% from 2024 to 2032.
The Asia-Pacific region currently holds the largest market share, fueled by the substantial contribution of SMEs to the regional economies. As SMEs continue to play a pivotal role in GDPs across the region, demand for insurance coverage is expected to rise.
One key factor driving this demand is the increasing threat of cyber risks, particularly in countries like India and Singapore. However, many SMEs remain unaware of the need for cyber insurance, leaving them vulnerable despite the rising threats.
A significant gap in insurance coverage exists globally, with approximately 80% of high-earning SMEs lacking proper protection. Many of these businesses also lack a Standard Industrial Classification (SIC) code, further complicating their ability to secure adequate insurance. Moreover, more than half of SMEs do not have coverage for their top three risks, a concerning trend given that global losses from natural disasters have surpassed $100 billion annually for four consecutive years, including 2023.
The insurance landscape has seen rising premiums, with a notable 20% increase in the first quarter of 2023—the highest in two decades. By the second half of the year, the commercial sector had experienced an additional 18% premium rise.
Government initiatives, growing awareness of business risks, and supportive legal frameworks are all contributing to the expansion of the SME insurance market. For instance, the Australian Small Business and Family Enterprise Ombudsman’s 2022 study on small business disaster preparedness highlighted the challenges SMEs face in securing adequate insurance, a trend that is expected to drive demand for better coverage.
Despite these opportunities, the market faces challenges from natural disasters, inflation, and fluctuating property values. Severe weather events, such as hailstorms and tornadoes, accounted for 68% of climate-related losses in the first quarter of 2023, causing $35 billion in economic damage. These events have led insurers to increase premiums and impose stricter policy terms, particularly in regions prone to natural disasters.
Property insurance continues to dominate the SME insurance market and is expected to maintain its leading position throughout the forecast period.
Related topics
