Study Calls for Policy Reforms to Expand Insurance Coverage for MSMEs

Kathmandu — A new study jointly released by the United Nations Development Program (UNDP) Nepal and the Nepal Insurance Authority has called for policy and regulatory reforms to expand insurance coverage among Nepal’s micro, small, and medium-sized enterprises (MSMEs).

The report, Risk Management in Nepal’s MSMEs: The Insurance Protection Gap, was unveiled on Monday in collaboration with the Society of Economic Journalists Nepal (SEJON). It identifies key structural barriers limiting insurance adoption and recommends policy measures to improve accessibility, affordability, and availability.

According to the study, Nepal’s insurance framework needs significant reforms to ensure wider coverage for MSMEs. It argues that insurance should be viewed not merely as a financial product but as a critical tool for business continuity and economic resilience, helping enterprises withstand natural disasters, climate-related risks, and business disruptions.

The report was prepared by the Institute for Integrated Development Studies (IIDS) with support from UNDP’s Insurance and Risk Finance Facility (IRFF). Its launch was accompanied by a high-level policy dialogue on expanding insurance access and strengthening the financial resilience of MSMEs.

The study notes that MSMEs are a key driver of employment, local livelihoods, and economic growth in Nepal. At the same time, they remain highly vulnerable to a wide range of risks. Strengthening the insurance system, it says, is essential for improving disaster risk management and ensuring the long-term sustainability of businesses.

Participants in the policy dialogue—including government officials, policymakers, regulators, insurance industry representatives, financial institutions, and MSME stakeholders—stressed the need for regulatory reforms, innovative insurance products, stronger public-private partnerships, and better integration of insurance into sustainable finance and disaster risk financing.

Former Finance Secretary Rameshwor Khanal said MSMEs play a vital role in Nepal’s economic growth and stressed the need to strengthen the roles of the Deposit and Credit Guarantee Fund and the Nepal Insurance Authority in managing risks faced by the sector. He also called for enhanced government support for insurance premiums to improve the resilience of MSMEs.

UNDP Nepal Resident Representative Kyoko Yokosuka said MSMEs are the backbone of Nepal’s economy but are also among the most exposed to a range of risks. Expanding insurance protection, she noted, is essential for safeguarding businesses, preserving jobs, and strengthening the resilience of the broader economy. She reaffirmed UNDP’s commitment to working with the government, the Nepal Insurance Authority, the private sector, and development partners to promote inclusive insurance solutions.

Nepal Insurance Authority Chief Executive Officer Sushil Dev Subedi said the study’s recommendations would help position insurance as a strategic investment for sustainable development and resilience among MSMEs. He expressed confidence that the findings would also guide future policy and regulatory reforms.

At the conclusion of the event, participating stakeholders pledged to work together to implement the study’s recommendations and narrow the insurance protection gap facing Nepal’s MSMEs. UNDP also said it would continue supporting the Government of Nepal through the IRFF to promote innovative insurance and risk financing solutions for climate and disaster risk management.