This report contains the findings of a diagnostic study on the provision of microinsurance to rural workers in China. The study was commissioned by the Access to Insurance Initiative and approved by the China Insurance Regulatory Commission (CIRC) in 2010. The study covers the provision of personal and property (including agriculture) microinsurance to China's 674 m (2010) rural residents.
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On the topic: Some countries had, or still have a significant magnitude of informal insurance activity, in particular in areas such as funeral and health insurance, or credit life insurance provided by mutuals or microfinance organisations. Government schemes and pilot programs are also often outside of the purview of supervisors.
Formalisation has been recognised as a considerable challenge by many insurance supervisors.
On the topic: The development of the A2ii and IAIS activity plans on inclusive insurance is proceeding largely in parallel. Several rounds of discussion among A2ii and IAIS Committees have taken place to better align our activities to strengthen our mutual roles and responsibilities. We would like to take the opportunity to seek your input during the Consultation Call in order to facilitate a bottom up approach.
On the topic: Given the typically low margins on low value policies, most successful microinsurance business models innovate distribution channels in order to minimise distribution costs and scale up the number of policies sold, either by leveraging groups or the infrastructure and reach of aggregators. These new ways to sell insurance typically result in long distribution chains involving a variety of entities and their employees, some of which may not traditionally be regulated by the insurance supervisor.
On the topic: Inclusive insurance markets require a proportionate approach to product oversight including product standards. Supervisors have different options for product oversight before and after product launch. The overall objective of such steps is to discourage products and services that may cause consumer detriment from reaching the market. Some insurance supervisors require the pre-approval of insurance products, in both life- and general lines or in one of the two. Others have opted for a file-and-use process.
This paper considers the various regulatory approaches implemented by insurance regulators and supervisors globally in order to achieve the objective of inclusive insurance market development. The primary question that this paper seeks to address is: what is the optimal regulatory approach to be followed by a particular country to promote increased access to insurance in a particular product market or across multiple product markets?
One of the aims of the cross-country synthesis exercise is to gain a better understanding of the dynamics, development and evolution of microinsurance markets. Identifying discrete microinsurance business models allows the roles and incentives of the players involved in the provision of microinsurance to be disaggregated so as to better understand the way that the microinsurance market evolves across countries and to gauge the risks involved.
A2ii's achievements over the past year were in line with the new focus, and the 2014 work plan is designed to entrench this role by creating direct opportunities for peer learning, building capacity, and supporting the implementation of regulatory change toward inclusive insurance markets.
The report analyses among other topics how the insurance market has evolved in the last years, which products have reached some segments of the low income population, how low income population have dealt with main risks confronted.