SME Foundation,UNDP launch insurance innovation challenge

The Insurance Innovation Challenge (IIC) was launched today in Dhaka by the SME Foundation (SMEF) under the Ministry of Industries, in partnership with the United Nations Development Programme (UNDP), to strengthen resilience among cottage, micro, small, and medium enterprises (CMSMEs) through innovative insurance solutions.

CMSMEs contribute around 32 per cent of Bangladesh's gross domestic product and employ nearly 87 per cent of the workforce. Despite their economic significance, these enterprises remain highly vulnerable to climate-induced disasters and systemic risks due to limited access to insurance, exposing livelihoods and business continuity.

The Insurance Innovation Challenge is a competitive grant facility designed to support regulator-approved, technology-driven, and gender-responsive insurance solutions tailored for CMSMEs. Under the initiative, two winners will receive grants of up to Tk 4.86 million and Tk 3.04 million, along with capacity development and visibility support.

Speaking at the launch event as chief guest, Md Obaidur Rahman, Secretary of the Ministry of Industries, said CMSMEs are the backbone of the national economy but face disproportionate risks from climate change and market shocks.

'The Insurance Innovation Challenge is a timely initiative that will help embed resilience into the financial architecture of small businesses, ensuring their sustainability and continued contribution to national growth,' he said.

Stefan Liller, Resident Representative of UNDP Bangladesh, said floods, cyclones, and droughts are no longer isolated events but recurring stresses that destroy assets, wipe out savings, and disrupt families.

'In these moments, the vulnerability of enterprises and households becomes inseparable. Yet access to insurance for cottage, micro, and small enterprises remains extremely limited,' he said, adding that the initiative aims to identify and scale regulator-approved insurance solutions that reflect the realities of how small enterprises operate.

Anwar Hossain Chowdhury, Managing Director of SME Foundation, said addressing the financial risks faced by marginal entrepreneurs remains a priority. He described the initiative as a vital pathway forward for CMSMEs.

Nurun Nahar, Deputy Governor of Bangladesh Bank, emphasised the importance of gender-responsive insurance in building an inclusive and sustainable economic structure. She noted that Bangladesh Bank is providing collateral-free SME loans of up to Tk 5 lakh, and plans are underway to link the credit guarantee scheme with CMSMEs to further ease access to finance.

Monirul Hoque, National Programme Officer of UNDP, delivered a keynote presentation on the Insurance Innovation Challenge, highlighting its focus on inclusive micro-insurance solutions.

The event also saw participation from the Insurance Development and Regulatory Authority, private insurers, microfinance institutions, fintech companies, and development partners, including Mohammad Abu Bakar Siddique from IDRA and Nazeem Hassan Satter, Deputy Managing Director of SME Foundation.

During the event, UNDP and SME Foundation also signed a memorandum of understanding to operationalise their collaboration on blended finance for CMSMEs, supported by the United Kingdom and Sweden. The insurance component of the initiative is being funded by the Government of Germany.

The MoU reaffirmed the commitment of UNDP and SME Foundation to supporting climate-vulnerable CMSMEs in Bangladesh.