Index Insurance: Status and Regulatory Challenges

This paper seeks to provide a review of supervisory approaches to index insurance and to set out some of the regulatory and supervisory challenges faced by insurance supervisors. It is drawing on the results of an online survey carried out in the first half of 2017 together with telephone follow-up.

The use of index insurance as an alternative to traditional indemnity-based insurance has increased over the last twenty years, particularly as a mechanism for insuring against extreme weather risks. More recently, the range of index insurance products has expanded to protect against other types of natural disaster, such as earthquake risk.

While index insurance products continue to be developed and offered, it is important that insurance supervisors have the capacity to understand and assess them and the necessary powers and tools to supervise them.