Advantages of Insurance to Business
In today’s unpredictable and ever-changing business environment, companies are constantly looking for ways to mitigate risks and protect their assets. Insurance is one of the best resources accessible to businesses for protecting their operations. In this article, we’ll talk about the benefits of insurance for businesses in India, and we’ll back up our statements with some reliable facts.
Protection against financial losses
The most significant advantage of insurance to businesses is protection against financial losses. The financial performance of a corporation can be significantly impacted by accidents, natural catastrophes, theft, and other unforeseen events. In such scenarios, insurance policies provide financial support to businesses to cover their losses, thereby reducing the financial burden on the company. For instance, in 2021, the total amount of claims settled by the non-life insurance industry in India was INR 1.87 lakh crore ($25.4 billion) (source: IRDAI). This shows how insurance helps businesses manage their financial risks and stay afloat in challenging times.
Enhanced credibility
Having insurance can enhance a company’s credibility, especially when dealing with clients, partners, and investors. Insurance indicates that a business is financially stable and responsible enough to safeguard its assets and operations. This can boost the confidence of stakeholders in the company’s ability to deliver quality services and products. In fact, a survey conducted by the Insurance Regulatory and Development Authority of India (IRDAI) revealed that 88% of customers believe that companies with insurance coverage are more trustworthy than those without insurance.
Employee protection
Employee welfare is a crucial aspect of any business, and insurance can play a significant role in this regard. Companies can offer insurance policies to their employees, which can cover medical expenses, accidents, and disability. This provides a sense of security to employees, which can improve their job satisfaction, productivity, and loyalty towards the company. According to a survey by Willis Towers Watson, 82% of employees consider health insurance as the most important employee benefit offered by their company.
Compliance with legal requirements
In India, certain insurance policies are mandatory for businesses to comply with legal requirements. For example, the Employees’ State Insurance (ESI) Act, 1948, mandates that businesses with more than 10 employees must provide them with ESI coverage, which covers medical expenses and disability benefits. Similarly, the Motor Vehicles Act, 1988, makes it mandatory for all vehicles on Indian roads to have third-party insurance coverage. Businesses can stay out of trouble with the law and avoid penalties by adhering to certain regulations.
Improved risk management
Insurance policies can help businesses improve their risk management strategies. By identifying potential risks and obtaining insurance coverage, businesses can reduce the likelihood of financial losses and mitigate risks. According to a report by the IRDAI, in 2020, the health insurance industry in India reported a growth rate of 13.9%, indicating that businesses are becoming more proactive in managing risks associated with employee health.
In conclusion, insurance is an essential component of any successful business strategy in India. Insurance policies offer businesses financial protection against risks, legal liabilities, and employee protection, as well as improving risk management strategies. With reliable data indicating the importance of insurance to businesses in India, it is clear that businesses should prioritize insurance as part of their overall financial planning.
