Microinsurance in Effort To Enhance Indonesia's Economic Resilience

Abstract

This paper provides a comprehensive analysis to identify how general insurance can scale up microinsurance for Micro, Small, and Medium Enterprises (MSMEs) protection in effort to enhance national economic resilience while insurance literacy and inclusion in Indonesia remain low. From a review using Systematic Literature Review (SLR), two issues were found that motivated the research. (1) So far, microinsurance has been defined as a product that targets only the low-income people. (2) Partnerships between micro finance institutions and insurance companies have not yet been formulated in an integrated business ecosystem. This paper reviews and provides proposals to enhance the contribution of microinsurance from the broader economic perspective. First, the insurance industry needs to redefine microinsurance while maintaining its simple, accessible, economical, and immediate (SMES) characteristics as a response to the protection needs of MSMEs. Second, it should collaborate with micro finance institutions to build an MSME business ecosystem in order to develop an insurance business within the MSME business environment. It can be concluded that with more amicable products, simpler business processes, and more affordable premiums, microinsurance has social and economic value for MSME actors in strengthening Indonesia's economic resilience.

Keywords: microinsurance, MSMEs, systematic literature review, business ecosystem, economic resilience