Learn more about the A2ii and have your questions about inclusive insurance answered.
1. What is microinsurance?
Microinsurance, as defined in the 2007 IAIS Issues Paper on the Regulation and Supervision of Microinsurance, is insurance that is accessed by the low-income population, provided by a variety of different entities and run in accordance with generally accepted insurance practices. This means that the risk insured under a microinsurance policy is managed based on insurance principles and funded by premiums. Microinsurance covers a broad variety of products, for example, life insurance, funeral cover, health, invalidity, livestock, crop and asset insurance.
2. What is inclusive insurance?
Inclusive insurance is a broader term denoting all insurance products aimed at the excluded or underserved market; rather than just those aimed at the poor or a narrow conception of the low-income market. This definition can be found in the IAIS Conduct of Business in Inclusive Insurance Issues Paper published in 2015.
3. Why is access to insurance important?
Access to insurance plays an important role in helping to reduce poverty. The inability to manage the risk of vulnerability caused by the sudden death of a family member, an illness, or the loss of income or property can perpetuate poverty. Low-income consumers very often do not have social or financial protection to help them withstand such shocks. In the event of a shock, past development efforts may be reversed and the near-poor may fall (back) into poverty. Even those in a relatively secure position may find themselves dragged into financial hardship. By helping them to mitigate shocks that could worsen their financial situation, insurance can support asset accumulation or prevent asset loss and help improve welfare over time, contributing to poverty reduction and social protection.
4. Why are policy, regulation and supervision important?
Regulation is broadly defined as the various legal instruments with binding legal powers (legislation as well as subordinate legislation) that together comprise the regulatory body or regulatory framework pertaining to insurance. Supervision describes the functions whereby the state seeks to implement and ensure compliance with regulation. The primary functions of insurance policy, regulation and supervision are to protect consumers and to contribute to market development by improving market efficiency.
5. What is meant by the term financial inclusion?
Financial inclusion denotes a situation where consumers, particularly low-income consumers, can access and use on a sustainable basis, financial services that are appropriate to their needs. The level of financial inclusion is determined by market or regulatory factors that might exclude or discourage individuals from using financial services, or could discourage financial service providers from offering such services to the low-income market. At the Toronto Summit in June 2010, the G20 endorsed nine principles for innovative financial inclusion, defined as improving access to financial services for poor people through the safe and sound spread of new approaches.
6. How does policy relate to regulation and supervision?
The term “policy” in the financial sector denotes the declared intention of a government on how it wishes to order the financial sector and the objectives that it wants to achieve. The financial sector policymaker is usually the ministry of finance but can be the central bank. The trade-offs between various government objectives (for example consumer protection, financial reform and financial inclusion) is managed within the policy domain. It is also at the policy level that coordination between the financial sector and inclusive insurance policy objectives, on the one hand, and various other government spheres of relevance to inclusive insurance markets, such as agriculture, health, social protection or disaster management, on the other hand, needs to take place. A policy stance can be contained in a specific policy document, such as a national financial inclusion strategy, but can also be the general policy stance or stated the intention of government contained for example in speeches, in the preamble to legislation or in other documents.
7. What are the Insurance Core Principles?
The Insurance Core Principles (ICPs), established by the IAIS, comprise essential principles that need to be adhered to for an insurance supervisory system to be effective. These principles set out the framework for insurance supervision, identify subject areas that should be addressed in legislation or regulation in each jurisdiction, and provide a basis for the IAIS on which it develops more detailed international standards and guidance.
8. Is the A2ii focused solely on microinsurance?
The goal of A2ii is to enhance broad-based, demand-oriented and sustainable access to insurance for poor and vulnerable people low-income customers. This requires a comprehensive look at all actors in the insurance sector. By definition, microinsurance is a part of the overall insurance sector. Thus, while the Initiative has a special focus on microinsurance (as insurance targeting the poor low-income segments), it supports the overall enabling environment for insurance market development.
9. How does A2ii work with the insurance industry?
The A2ii works with supervisors and it consults the industry and other stakeholders throughout the diagnostic study, as well as the process of policy and regulation development. It shares knowledge in stakeholder dialogue events to enable supervisors to understand the industry’s perspectives. Industry representatives, alongside other stakeholders, are a key part of the process to develop appropriate products, delivery channels and consumer protection approaches for low-income clients.
10. How can a supervisory authority engage with the A2ii?
The A2ii works in emerging markets and developing economies across the world. A supervisory authority does not need to be an IAIS member to collaborate with A2ii. The A2ii warmly welcomes all supervisors committed to improving access to insurance. Insurance policymakers, regulators and supervisory authorities that would like to work with the A2ii can write to the Secretariat at info[at]a2ii.org to express their interest and their commitment to access to insurance. This will form the basis for further interactions with the Initiative.
11. What is the impact of the A2ii so far?
Since our founding in 2009, we have worked with local and global partners, insurance authorities and agencies to identify where there is a need for insurance protection, determine the barriers standing in the way, then build the capacity of insurance supervisors and regulators to implement solutions. There are now at least 23 countries with a microinsurance regulatory framework, with 25 countries in the process of developing their own framework, as compared with only 6 countries in 2009.