Structural and Behavioral Determinants of Insurance Uptake among Small and Medium-Sized Enterprises in Malawi: Evidence from a Hierarchical Survey-Weighted Logistic Regression Analysis

Abstract

Small and Medium-Sized Enterprises (SMEs) play a critical role in economic growth, employment creation, and poverty reduction in Malawi. Despite their contribution to national development, formal insurance uptake among SMEs remains persistently low, exposing enterprises to financial losses arising from operational, environmental, and market-related risks. While previous studies have examined insurance demand among households, farmers, and individual consumers, empirical evidence explaining insurance uptake among SMEs in Malawi remains limited. This study examined the determinants of insurance uptake among SMEs using nationally representative data from the 2019 FinScope Malawi Micro, Small and Medium Enterprise Survey. A quantitative cross-sectional research design was employed, and data were analysed using survey-weighted descriptive statistics and hierarchical survey-weighted logistic regression. The findings indicate that only 6.27% of SMEs possessed formal insurance. The final regression model showed that business registration, enterprise size, ownership of multiple businesses, business sector, awareness of SME support institutions, insurance perceptions, and rural residence significantly influenced insurance uptake, whereas demographic characteristics and conventional financial inclusion indicators, including banking, savings, borrowing, and digital financial services, did not retain independent statistical significance after adjustment. These findings demonstrate that insurance uptake among SMEs is driven primarily by enterprise-level structural and behavioural factors rather than financial inclusion alone. The study contributes to the literature by demonstrating the value of hierarchical modelling in distinguishing independent determinants of insurance uptake and highlights the need for policies that promote enterprise formalisation, insurance awareness, and institutional trust alongside broader financial inclusion initiatives.