A new report on Index insurance best practices for insurance regulators and practitioners in the Pacific Island countries has been published by the Pacific Insurance and Climate Adaptation Programme (PICAP) and the Access to Insurance Initiative (A2ii).
Index insurance solutions have been around for a number of years and provide many potential benefits, especially to regions that are exposed the most to natural catastrophes. It also has the potential to benefit population groups that are most excluded from traditional insurance systems. However, supervisory frameworks to support their development and ensure consumer protection are still in the early stages of their evolution and development.
The publication provides some crucial consideration for regulators, but for other relevant stakeholders as well. The report identifies and documents best practices in managing index-based insurance solutions, covering different aspects of supervision, including:
- prudential requirements,
- legal considerations,
- design and distribution strategies and
- aspects of consumer education and protection
