UNDP Nepal, NIA release study on insurance protection gap for MSMEs

KATHMANDU: The United Nations Development Programme (UNDP) Nepal and Nepal Insurance Authority on Monday released a study titled 'Risk Management in Nepal’s MSMEs: The Insurance Protection Gap'. The report identifies structural barriers to insurance access for micro, small and medium enterprises (MSMEs) and offers recommendations to improve coverage, affordability and availability.

Prepared by the Institute for Integrated Development Studies (IIDS) with support from UNDP’s Insurance and Risk Finance Facility (IRFF) and launched in collaboration with the Society of Economic Journalists – Nepal (SEJON), the report calls for policy and regulatory reforms to expand insurance uptake among MSMEs. It argues that insurance should be developed as a tool for business continuity and economic resilience against natural disasters, climate-related risks and business interruptions, not merely as a financial product.

The study notes that MSMEs are central to job creation, local livelihoods and economic growth but remain highly vulnerable to a range of risks. It recommends strengthening the insurance system to improve disaster risk management and ensure long-term business stability.

A high-level policy dialogue held alongside the launch brought together government officials, policymakers, regulatory bodies, the insurance industry, financial institutions and MSME representatives. Participants emphasised regulatory reform, the development of innovative insurance products, expanded public–private partnerships, and linking insurance with sustainable finance and disaster risk financial management.

Former Finance Minister Rameshore Prasad Khanal urged stronger roles for the Deposit and Credit Guarantee Fund and the Nepal Insurance Authority in managing sectoral risks and said government subsidies on insurance premiums should be increased to boost MSME resilience.

UNDP Resident Representative for Nepal Kyoko Yokosuka said, 'Expanding insurance protection is essential for the resilience of businesses, employment and the wider economy.' She affirmed UNDP’s commitment to continue collaboration with the government, the Nepal Insurance Authority, the private sector and development partners to build a more inclusive insurance system.

Susil Dev Subedi, Executive Director of the Nepal Insurance Authority, said he was confident the study’s recommendations would help establish insurance as a strategic investment for sustainable development and resilience in the MSME sector.

At the close of the event, stakeholders pledged to work on implementing the report’s recommendations. UNDP said it will continue supporting the promotion of innovative insurance and risk-financing solutions for climate and disaster risk management in partnership with the Government of Nepal through IRFF.