Resource
Issues in regulation and supervision of microinsurance
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- French
Summary (English)
The paper, released by the International Association of Insurance Supervisors (IAIS) and the Consultative Group for Assisting the Poor (CGAP), identifies issues and challenges in developing an enabling regulatory framework for promoting microinsurance in line with the IAIS Insurance Core Principles (ICPs). Microinsurance is defined as insurance that is accessed by low-income population, provided by a variety of different entities, but run in accordance with generally accepted insurance practises.
Supervisors and other microinsurance promoters (such as insurers, governments, donors, consumer lobbies) in many jurisdictions increasingly realise that a more conducive and enabling regulatory environment is required for the development of microinsurance.
This paper explains the current state of microinsurance which is being developed for the low income population on the basis of prudent insurance business principles; its important role in developing inclusive financial systems particularly in emerging markets, and why it needs to be regulated and supervised along professional lines.
Biases and barriers are not always obvious to the regulatory bodies due to long-standing unexamined practices.
The Issues Paper aims at outlining salient features of microinsurance in general, and of its regulation and supervision as an input for high-level expert discussion among regulators, supervisors and other stakeholders involved in the provision of insurance services for lower-income segments. It does not provide recommendations of any kind for the supervisors to follow. It recognises that the ICPs are the foundation of all insurance supervision, including microinsurance. Even though microinsurance has different features in many regards, a change in ICPs is not foreseen. It is rather the criteria on how the ICPs are interpreted with specific reference to microinsurance that may be subject to certain adjustments. A closer examination and analysis of different unique aspects and a continuous dialogue with supervisors will assist in determining the key principles in the regulation and supervision of microinsurance. This shall form the basis for justifying adaptations to the regulatory framework and also to develop standards and guidance.
The primary audience of this paper are insurance supervisors, particularly IAIS members in developing countries, who are responsible for supervising entities licensed under insurance laws. Consequently, the impact of the social welfare system on microinsurance is not discussed in this paper. However, the ILO Social Security Department and the STEP Programme does advocate their vision of microinsurance as a tool for extending social security.