Managing litigation risk through business legal expense insurance: Facilitators and inhibitors for MSMEs

• DOI: 10.1016/j.iimb.2023.04.002
• Publication Date: 2023-04-10T15:29:02Z
• Authors: Sanjay Kumar Mishra; Hemant Kushwaha
• Keywords: Insurance; Risk management; HF5001-6182; India; Business; Litigation risk; Small business

This study explores the possibility of offering business legal expense insurance (BLEI) in India to enable 63 million Micro, Small and Medium Enterprises (MSMEs) to hedge against litigation risk. MSMEs, at present, depend upon independent law firms in the event of litigation. Based on the annual legal expense of a sample of 1822 MSMEs, this study suggests that the potential size of the market for BLEI among MSMEs may range between ₹291 billion (US$3.84 billion) to ₹417 billion (US$5.50 billion). Enabling regulatory intervention and the efficiency of the legal system is key to the development of the market.