SME insurance market to reach $39b globally by 2032

The region holds the largets market share.

The global SME insurance market was valued at $22.8b in 2023 and is expected to reach $24.23b in 2024 and $39.35b by 2032, growing at a compound annual growth rate (CAGR) of 6.25% from 2024 to 2032, according to Market Data Forecast.

The Asia-Pacific region holds the largest market share, driven by the significant contribution of SMEs to regional GDPs. 

Rising cyber threats, particularly in countries like India and Singapore, are boosting demand for cyber insurance, although awareness remains low amongst many SMEs.

Globally, around 80% of high-earning small and medium enterprises worldwide lack proper insurance coverage or are underserved, with many also lacking a Standard Industrial Classification code. 

Additionally, more than 50% of SMEs do not have protection against their top three risks. This gap is concerning, given that global losses from natural disasters have exceeded $100b for four consecutive years, including in 2023. 

Insurance premiums surged significantly in 2023, with a 20% increase in the first quarter, marking the first time in two decades that the sector saw an average price rise of more than 20%. 

The second half of the year recorded an 18% average premium increase in the commercial sector. 

Government initiatives, increasing awareness of business risks, and favourable legal frameworks are driving the growth of the SME insurance market. 

For example, the Australian Small Business and Family Enterprise Ombudsman conducted a study on small business disaster preparedness in 2022, highlighting insurance challenges faced by SMEs. This recognition is expected to stimulate demand for better coverage. 

Despite opportunities, the market is constrained by natural disasters, rising inflation, and unstable property values.

Severe weather events, such as hailstorms and tornadoes, accounted for 68% of climate-related losses in the first quarter of 2023, causing economic damage of $35b. This has prompted insurers to raise premiums and impose stricter policy terms, particularly in disaster-prone areas. 

Property insurance remains the largest segment of the SME insurance market and is expected to maintain its dominance throughout the forecast period.