Workplace injury claims among India’s micro, small and medium enterprises (MSMEs) have risen sharply over the past year, even as businesses grapple with workforce pressures, evolving compliance demands and the unintended consequences of always-on work cultures, according to a report by BimaKavach.
The report based on insights from over 6,000 MSMEs across more than five sectors, shows a 31 per cent year-on-year increase in workplace injury claims between FY2024–25 and FY2025–26. The rise shows higher workplace activity, improved reporting and wider insurance coverage enabled by faster digital policy issuance, the company said.
The findings came as conversations around worker safety and workforce sustainability gain prominence amid Labour Day, with industry observers pointing to a broader shift in how MSMEs approach risk, productivity and employee wellbeing. The report indicates that the increase in claims is not solely a reflection of deteriorating safety conditions but also of improved reporting mechanisms and deeper insurance penetration among MSMEs.
Faster digital adoption has played a significant role, with 69.1 per cent of policies issued on the same day and more than 82 per cent activated within three days, compared with traditional timelines of three to seven working days.
Tejas Jain, founder and chief executive of BimaKavach, said workplace risks often remain underestimated until they begin to affect business operations. “At a time when conversations around worker safety are gaining importance, workplace risk is often underestimated until it starts affecting operations. With better reporting today, these gaps are becoming harder to ignore,” Jain said.
He added that businesses are increasingly recognising not just physical risks but also compliance gaps and operational vulnerabilities that can surface unexpectedly.
Manufacturing Sector Accounts For Highest Claims
Sectoral trends show that factory and manufacturing environments continue to report the highest frequency of claims, driven by machinery-related accidents, slips and falls, and construction-linked injuries. In contrast, information technology and technology-enabled sectors report near-zero claims despite maintaining a strong base of insurance policies, underscoring the relatively lower physical risk exposure in such industries.
The divergence highlights how workplace risk remains closely tied to the nature of operations, with traditional sectors facing higher exposure compared with service-led industries. Seasonal factors also play a critical role in shaping workplace risk patterns. July alone accounts for 13.4 per cent of annual claims, making it the single highest-risk month, followed by March and June/October.
Overall, the monsoon period from June to September contributes to 43 per cent of total claims, driven by outdoor hazards, slippery conditions and increased operational challenges in sectors such as construction and logistics. The data points to the need for more targeted risk mitigation strategies during specific periods of the year, particularly for MSMEs operating in high-exposure industries.
Despite growing awareness, compliance remains the primary driver of insurance adoption among MSMEs. The report finds that 94.6 per cent of businesses purchase workmen's compensation insurance mainly to meet statutory requirements. However, there are early signs of a shift towards more structured risk management, with businesses beginning to view insurance as a tool for employee protection and operational continuity rather than merely a compliance obligation.
“As digital adoption improves access and speeds up coverage, the real need now is to move from reacting to risk to staying ahead of it with a more proactive, data-led approach,” Jain said.
Beyond physical risks, MSMEs are also contending with workforce-related challenges, particularly those linked to productivity expectations and employee wellbeing in an increasingly digital work environment. Industry voices noted that the normalisation of constant connectivity is contributing to rising burnout levels, even as businesses push for higher efficiency.
Dishant Mehta, co-founder and chief technology officer at Kombee, said organisations have gradually normalised an “always-on” culture without fully recognising its impact. “We have built systems that never sleep and somehow convinced ourselves that the people running them shouldn’t either. Notifications at midnight, messages over weekends, and the expectation of instant replies, we have normalised all of it quietly,” Mehta said.
He added that sustainable productivity depends less on extending working hours and more on protecting them. “The smartest investment any leader can make right now isn’t in another productivity tool. It’s in giving teams real, unambiguous permission to log off and genuinely mean it,” he said, adding that such an approach is critical for long-term talent retention.
Regional Concentration Highlights Uneven Adoption
Geographically, insurance adoption remains concentrated in a handful of industrialised states. Maharashtra accounts for 20.9 per cent of total policies, followed by Gujarat, Karnataka and Delhi. Together, these four regions contribute over 51 per cent of all policies, reflecting the concentration of industrial and corporate activity, as well as relatively higher awareness and compliance levels.
The skew suggests that large segments of MSMEs in other regions may still be underinsured or less engaged with formal risk management frameworks. The report shows the growing role of digital platforms in transforming how MSMEs access and manage insurance. Faster policy issuance, simplified onboarding and improved accessibility are helping bridge gaps that previously limited adoption.
As MSMEs scale operations and navigate increasingly complex environments, digital tools are expected to play a critical role in integrating workforce protection into broader business strategy. The combination of rising claims, evolving risk factors and workforce pressures suggests that MSMEs are entering a phase where traditional approaches to safety and productivity may no longer suffice.
The findings collectively point to a changing landscape in which workplace risk, employee wellbeing and operational resilience are becoming increasingly interconnected. While compliance continues to anchor insurance adoption, the shift towards proactive risk management, supported by digital infrastructure and changing workplace expectations, is gradually reshaping how MSMEs approach workforce protection. |
