A holistic and systematic approach to market development can overcome barriers to serving insurance to the low-income population. Collaboration between supervisors/regulators, industry players, policy makers, and donors is already showing positive results in some countries. This joint webinar organized by the ILO's Microinsurance Innovation Facility, together with the Access to Insurance Initiative, discussed inclusive insurance market development. Ithighlighted activities by supervisors through the International Association of Insurance Supervisors (IAIS) and industry players. It took inspiration from achievements in Zambia and in the Philippines to consider potential strategies for enhancing inclusive insurance markets.

1. Developing Inclusive
Insurance Markets

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3. Profile of participants
3
More than 300 registered
participants

4. Developing Inclusive
Insurance Markets
Presenter:
Joselito Almario
Director
Department of Finance - National Credit
Council, Philippines
Presenter:
Peter Van Den Broeke
Principal administrator
International Association of
Insurance Supervisors
Presenter:
Caroline Phily
Microinsurance Officer
Microinsurance Innovation Facility
Presenter:
Lemmy Manje,
Microinsurance Coordinator
Finmark Trust/ILO, Zambia
Moderator:
Jasmin Suministrado
Knowledge Officer
Microinsurance Innovation Facility
44

5. Discussion flow
1. The role of supervision in developing insurance
markets
2. The different stages of microinsurance development
3. Stimulating a nascent market : The case of Zambia
4. Pushing for microinsurance diversification: The case
of the Philippines
5. Learning from the experiences of Zambia and the
Philippines
5

6. The role of supervisors (1)
• The objective of insurance regulation and supervision is to protect
policyholders.
• The need for protection is higher when access to insurance
markets is first extended. Protection will enhance the trust of the
consumer in the insurance sector.
• Effective supervision needs - as a precondition - a sound and
sustainable financial sector policy. This policy could include the
development of insurance markets.
• If preconditions for effective supervision are missing the
supervisor should address these. This includes:
• Raising awareness of the government and
• Using additional powers to deal with the weaknesses in the system.
6

7. The role of supervisors (2)
• Supervisors need to take a proportionate approach when
checking insurers’ compliance with insurance regulation.
• This means considering the nature, scale and complexity of the
business, risk and organisation when verifying whether the
objectives of supervision are met.
• This approach helps to develop the insurance sector and to avoid
regulatory burdens and barriers to innovations.
• Possible examples for small enterprises with simple risk profiles:
• Lighter touch oversight and registration
• Special conditions to allow pilots
• Lower required solvency capital
• Shared actuarial functions
7

8. Stages of development
Nascent
Few MI
products, mainly
credit life
Growing
Simple products
are scaled up
Diversifying
More complex
products are
developed
Competition
Clients have
choice of products
and providers
Quality products, distribution, demand
88

9. Barriers to development
• Awareness and
interest
• Skills (basic)
• Data
• Understanding
&Trust
• Distribution &
business case
• Product value
• Skills
(advanced)
• Business case
& PPP
• Consumer
protection
9 • Supply side
• Demand side

10. The stakeholder approach
 Many stakeholders can impact the development of inclusive
insurance.
 There is a need for a coordinated and systematic process for
market development, where capacity building, research in the pre-
competitive space and innovation would be collectively design
and shared.
10
Risk carriers
and delivery
channels
Regulators
and
supervisors
Policy makers Enablers and
donors

11. Impact on Supervision
Nascent
Few MI
products, mainly
credit life
Growing
Simple products
are scaled up
Diversifying
More complex
products are
developed
Competition
Clients have
choice of products
and providers
Moving to next stages will in general show an increase in risk
profile, organisational growth and more complex products and
operations.
This will affect the proportionate application of regulation which might
lead to stricter requirements.
1111

12. Stages of development:
Zambia and the Philippines
Nascent
Few MI
products, mainly
credit life
Growing
Simple products
are scaled up
Diversifying
More complex
products are
developed
Competition
Clients have
choice of products
and providers
12
ZAMBIA PHILIPPINES
12

13. Zambia: Microinsurance before 2009
Regulation
• No specific
regulations on
microinsurance
• Supportive
regulator
• Hesitant and risk
averse providers
Product
• Product offerings
narrow and
limited
• Mismatch
between demand
and supply
• Inappropriate and
unaffordable
products
• Complex and
complicated
contracts
Awareness
• Low
understanding
• Low experience
• Misconceptions
• Distrust of
insurers
13

14. 14
2009
2 active insurers among 12
insurers
Less than 1% microinsurance
penetration
Mainly Credit life
< 90,000 policyholders
estimate
Distribution mainly via MFIs
and banks
14
Zambia: Microinsurance landscape

15. Zambia: Accelerating microinsurance
development
• Diagnostic report completed
• Creation of a steering committee (SC) and multi-stakeholder
technical advisory group (TAG) to oversee strategy
development and implementation process
• Microinsurance development strategy/action plan finalised in
January 2010
1515

16. Zambia: Microinsurance development
process
16
Regulatory
review and
formulation
Supplementary
studies on the
supply side
Business
opportunity
awareness
Capacity
building
interventions
Supporting
product
development
and marketing
Consumer
education
and product
awareness
• Technical
assistance to
regulator
• Industry
consultative
workshops
• Supplier assessment
study
• Aggregator study
• Finscope analysis
• Microinsurance
Innovation Seminars
• Capacity diagnostic study
• Training workshop
• Technical assistance
• Microinsurance Acceleration
Facility
• Microinsurance
marketplace
• Media programmes
• Technical assistance
to insurers and
distributors
16

17. 17
Zambia: Market developments
2012
5 active insurers (Life)
and 3 in the pipeline (non-life)
Coverage
Life: 220,000+
Credit life: 115,000+
Broader distribution
(MFIs, banks, Mobile Network
operators, workers
unions, microenterprise
associations, community
based agents)
17
2009
2 active insurers among 12
insurers
Less than 1% microinsurance
penetration
Mainly Credit life
< 90,000 policyholders
estimate
Limited distribution (mainly
via MFIs and banks)

18. Stages of development:
Zambia and the Philippines
Nascent
Few MI
products, mainly
credit life
Growing
Simple products
are scaled up
Diversifying
More complex
products are
developed
Competition
Clients have
choice of products
and providers
18
ZAMBIA
18
PHILIPPINES

19. Inadequate Policy
and Regulatory
Framework
• Vague
government
policy direction
• Unclear
regulation and
guidelines on
microinsurance
• Hesitant
providers
Inappropriate
Products
• Not tailor-
fitted
• Unaffordable
• Complex and
complicated
contracts
• Cumbersome
requirements
Lack of
Awareness
• Distrust of
insurance
providers
• “Leave it to
destiny”
mentality
• No immediate
benefits
• Additional
financial
burden
19
Philippines: Microinsurance before 2009

20. 20
Philippines: Microinsurance landscape
20
2008
2 Commercial insurers
6 Mutual Benefit
Associations
7 Products approved
About 3 million individuals
covered –50% informal
insurance , mostly credit life

21. GOVERNMENT
SECTOR
(Policy/Regulatory
Bodies)
PRIVATE
SECTOR
(Insurance
providers, intermediaries
, microfinance
institutions)
21
Identification
of themes
Creation of
Technical
Working
Groups based
on themes
Drafting of
framework
Consultation with
stakeholders and
public, and
finalization of
framework
Drafting
and
issuance of
guidelines/
regulations
Regional
dissemination
seminars and
nationwide trainings/
workshops
Philippines: 2009 convergence

22. • Performance Standards
Formulated
• Alternative Dispute Resolution
Mechanism Established
22
Market Conduct
Product Innovation and
Development
Financial Literacy and
Advocacy
Consumer Value and
Protection
POLICY AND
REGULATORY
ENVIRONMENT
• Microinsurance Defined
• Microinsurance Providers Identified
• Formalization Process Clarified
• Microinsurance Agents/Brokers Created
(CBOs included)
• Reporting Standards Established
• MBA Chart of Accounts Revised
• Prototype Product Developed:
composite product
• Contracts Simplified
• Branding and Slogan Conceived
• Trainings on MI Advocacy and
Seminars
Philippines: Key interventions

23. 23
Philippines: Market developments
2012
35 Commercial insurers
(Life – 17, Non-life 18)
19 Mutual Benefit
Associations
89 Products approved
(Life – 38, Non-life – 25, MBAs
– 26)
23
2008
2 Commercial insurers
6 Mutual Benefit
Associations
7 Products approved
About 3 million individuals
covered –50% informal
insurance , mostly credit life
About 12 million individuals
covered – excluding
government sponsored
schemes

24. 24
Lessons in developing inclusive insurance
markets
• Need for in-depth analysis of the barriers for market
development
• Create buy-in thanks to a well-structured stakeholder process
• Customize intervention to support progressive development
24
Nascent
Few MI
products, mainly
credit life
Growing
Simple products
are scaled up
Diversifying
More complex
products are
developed
Competition
Clients have choice
of products and
providers

25. 2525
Learning from Zambia’s experience
• Ownership
• Effective engagement of key stakeholders and local ownership of the process
• Leadership
• Support and leadership from the Insurance Regulatory Authority
• Executive support and coordination of process
• Dedicated multi-stakeholder technical working groups
• Road map
• Goal, action plan, strategy, market development interventions, performance
indicators
• Action research
• Link research to action at different levels ensuring that research outcomes are
integrated into programming [e.g. supplier capacity building plan/interventions
should be based on supplier assessments]
• Monitoring, impact assessment and information dissemination
• Measure and share impact and emerging lessons within the industry and
globally

26. 2626
Learning from the Philippine experience
• Institutionalize inclusivity
• Set up strategic public-private sector collaboration
• Provide effective mechanisms for multi-sectoral dialogues
• Build trust
• Formulate broad-based frameworks through consultations as an initial step
• Involve community-based organizations in the whole process
• Issue clear guidelines/regulations (providers/distribution
channels/products/contracts/claims settlement, etc.)
• Ensure consumer value/protection
• Require discernible marks in contracts for approved microinsurance products
• Localize redress mechanisms to ensure accessibility and least cost
• Broaden financial literacy
• Include all sectors, not only clients
• Design key messages pertinent to each major stakeholder
• Involve local government units
• Create a core of advocates at all levels

27. Developing Inclusive
Insurance Markets
Presenter:
Joselito Almario
Director
Department of Finance - National Credit
Council, Philippines
Presenter:
Caroline Phily
Microinsurance Officer
Microinsurance Innovation Facility
Moderator:
Jasmin Suministrado
Knowledge Officer
Microinsurance Innovation Facility
2727
Presenter:
Peter Van Den Broeke
Principal administrator
International Association of
Insurance Supervisors
Presenter:
Lemmy Manje,
Microinsurance Coordinator
Finmark Trust/ILO, Zambia