8th Consultative Forum on the topic of “Challenges and opportunities presented by alternative distribution channels”
This event gathered 60 participants from Latin American and Caribbean insurance supervisory authorities and industries. It elaborated how client aggregators have changed the landscape of the microinsurance industry.
Some of these mass distribution channels work with national agents, brokers or global intermediaries/ technical service providers whereas others sell insurance directly to the client. The aggregators can deliver insurance products through leapfrogging their infrastructure for client identification, sales, administration and payments, often also involving call centres. They can greatly expand the reach of microinsurance to previously unserved consumers. However, the downside of this may be product design that does not cover peoples’ most important risks, high commission rates or low consumer understanding while face-to-face interaction is limited, all of which can result in questionable product value and low claims ratios.
They can greatly expand the reach of microinsurance to previously unserved consumers. However, the downside of this may be product design that does not cover peoples’ most important risks, high commission rates or low consumer understanding while face-to-face interaction is limited, all of which can result in questionable product value and low claims ratios.
During the Forum, regulators and supervisors discussed how they can ensure consumer protection while stimulating new distribution channels. It is imperative for regulators, insurers and the intermediaries in the different channels to work together to achieve this balance. Supervisors need to enforce quality control measures upon the insurance companies and their channels. Meanwhile, insurers need to simplify their product and use a multi-channel approach for different target groups. Additionally, the regulation needs to be flexible to protect consumers and stimulate innovation.
The Forum took place just a week after Hurricane Otto hit Costa Rica. Tomás Soley of Superintendencia General de Seguros de Costa Rica (Sugese) remarked at the start of the Forum that: “Farmers and other rural people faced high uninsured losses. Insurers and regulators should recognise the importance of sustainable products for the low-income people and farmers.”
Connor Donaldson of the International Association of Insurance Supervisors (IAIS) agreed that: “The input for the development of appropriate regulations comes from conferences like this and from participants like you. We learn lessons and apply them directly in our supervisory material. Technology is driving a significant shift in the landscape.”
The IAIS, the Microinsurance Network (MIN), the A2ii and the Sugese jointly organised the Forum.
