Access to Insurance InitiativeA global programme for sound regulatory and supervisory frameworks

How the Access to Insurance Initiative contributes to financial inclusion

25 April 2013, Panama CityXXIV Annual ASSAL General Meeting

Martina Wiedmaier-Pfister, Policy Adviser to A2iion behalf of German Federal Ministry for EconomicDevelopment and Cooperation (BMZ)

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The Initiative

Joint programme of 10 international development agencies and IAIS (International Association of Insurance Supervisors)

Unique relationship triggers the reforms in regulation and supervision required for the development of inclusive insurance markets

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Rationale of the Initiative

Policy makers increasingly commit themselves to improve access to financial services for the poor (G20/ GPFI)

Regulatory and supervisory frameworks are not yet conducive for spurring access to insurance

Supervisors strive to facilitate insurance for the underserved and its product lines, suppliers and clients

Strengthening institutional and regulatory capacity is essential to improve access to insurance

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Dimensions of Financial Inclusion

Quality Usage

Access

Impact at household

and firm level

From: World Bank Financial Inclusion strategic Framework for GPFI

IAIS Application Paper para 1.9.“Financial inclusion” refers to a state in which all working age adults have effective access to credit, savings, payments, and insurance from formal providers. (Global Partnership for Financial Inclusion)

“Effective access” involves convenient and responsible service delivery, at a cost affordable to the customer and sustainable for the provider, with the result that financially excluded customers use formal financial services rather than existing informal options[1]

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Phase 1 of the Initiative

International dialogue events Thematic research Synthesis project

IAIS Issues papers IAIS Application papers Toolkit on self-assessment Cooperation with IAIS committees

Country diagnostics Stakeholder processes Implementation projects Toolkit development

Access themes in the ‘G20 ‘Financial Inclusion Process’ and SSB Workstream

IAIS-Microinsurance Network-Joint Working Group

4 – Advocacy and International

Platforms

2 - Undertaking country projects

3 - Contributing to IAIS standard-setting

1 – Building knowledge and learning

Conducive policy andregulatory

environment

↓ Improved access toinsurance

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Achievements

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Achievements

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Achievements

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IAIS Application Paper Inclusive Insurance

Background: ICPs apply to supervision in all jurisdictions and business lines; however, certain supervisory requirements and actions need adjustment in accordance with the nature, scale and complexity of the risks posed by the individual insurer (“proportionality principle”)

Five interrelated issues: • Formalisation of informal providers / use transitional arrangements• Facilitation of innovations that overcome barriers to access• Proportionate application of ICPs (nature, scale and complexity)• Allocation of clear roles and responsibilities• Considerations for a definitionSee: IAIS Application Paper on Regulation and Supervision supporting Inclusive Insurance Markets (Oct. 2012) www.iaisweb.org/Application-papers-763

Achievements

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Current Projects

Component 1: Country Diagnostics, Dialogue and Private-Public Consensus

Component 2: Development and Implementation of Regulatory Road Maps

Component 3: Learning, Communi-cating and Catalyzing

Four-country project

in Latin America

Peru

Colombia

Jamaica

Brazil

A2ii and

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Current projects

Global projects in 2013: • Financial Inclusion Training module • Self-assessment and peer-review on regulation and supervision

supporting inclusive insurance markets• Thematic notes on a) business models/intermediation and b)

current regulatory approaches • Impact assessments of regulatory reform• Contributions to Financial Inclusion Subcommittee of IAIS (Issues

Paper Market Conduct, Distribution and Consumer Protection)

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Thematic Note on business models

Name Description of model Examples1. Individual sales One on one sales through fulltime insurance

agents or brokers, including outbound call centres; can be supported by in-bound call centres; no client aggregator involved

SINAF Seguros, Grupo Villa (Brazil), Metropolitan REI (South Africa)

2. Embedded Insurance policy conditional upon or directly linked to another service, such as credit, savings or mobile telephony, with which it is jointly marketed

Credit life; MNO loyalty schemesBanca Caja Social, TIGO BIMA (Tanzania)

3. Compulsory Insurance required by regulation. Third party motor vehicle insuranceSocial health insurance

4. Cross-selling Insurance sold to existing clients of non-insurance entities; active sales persons involved

Bancassurance; retailer sales; Casas Bahia; Codensa Mapfre

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Thematic note on business models

Name Description of model Examples5. Group decision Members of a group become

policyholders by virtue of group rather than individual decision; collective negotiation; universal or opt-in

Labour unions, PASI, China village model; cooperatives; Association of Tanzania busdrivers

6. Self-help Group of persons pool own risks Philippines MBAs; funeraria and cooperatives

7. Public provision Government purchases insurance on behalf of class of citizens; premium subsidy + commercial underwriting

Health insurance in India; disaster risk in rural China

8. Passive aggregators Individual purchases insurance without intervention of sales person

Internet sales; Pep/Hollard

Phase 1: first 3 years: awareness raising, knowledge gathering and dissemination-

knowledge hub

PLAN: A2ii becomes an implementation partner to IAISon access to insurance

Phase 2: toward sustainability: producing and enabling the use of knowledge

supervisors need- supervisory support

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New Strategy Phase 2

Proposed Mission/Vision:We are the implementing partner of the IAIS to increase access to insurance. We inspire and support supervisors to promote inclusive and responsible insurance, reducing vulnerability.

The Initiative aims to increase access and usage of insurance by 10 % in IAIS member jurisdictions and beyond, over a period of 6 years

To achieve this the Initiative will set up a supervisory support facility of USD 50 million

New Strategy Phase 2

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IAIS/A2ii partnership will make the insurance sector stand out as the globally leading model for promoting financial inclusion

Many IAIS members have high levels of financial exclusion making financial inclusion a fundamental priority for IAIS

IAIS has an established process of implementation of its standards but lacks the resources to offer supervisory support to its members

New Strategy Phase 2

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Supervisory CooperationSupport cooperation between supervisors through MMoU,Repository of Supervisory Colleges, etc.

IAIS STANDARD SETTING

Assessment Self Assessment and Peer Review, Surveys (eg Supervisory Development Survey), Input from regional coordinators and implementation partners (eg FSI, A2ii)

Assessment Self Assessment and Peer Review, Surveys (eg Supervisory Development Survey), Input from regional coordinators and implementation partners (eg FSI, A2ii)

Supervisory Development and Capacity Building

Targeted seminars, training material, leveraging partners

Supervisory Development and Capacity Building

Targeted seminars, training material, leveraging partners

Ongoing MonitoringTargeting monitoring of implementation activities and progress.

Ongoing MonitoringTargeting monitoring of implementation activities and progress.

Feedback to Standard Setting Activities

Financial InclusionSupport application of ICPs for inclusive markets linked with IAIS Standard Setting and Implementation.Direct link with A2ii

New Strategy Phase 2

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Discussion on cooperation ASSAL members and A2ii

Cooperation between A2ii and ASSAL members on new strategy

Invitation to participate in A2ii projects: IAIS self-assessment and peer review Financial Inclusion Training Module Others (impact, synthesis)

Discussion

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Thank you for your attention!

www.access-to-insurance.org