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CISNA MI Forum: Official launch of report on Regulating for Inclusive Insurance Markets in SADC
The report on Regulating for Inclusive Insurance Markets in SADC was officially launched at the SADC Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA) Microinsurance Forum in Johannesburg, South Africa on 6 December, 2013. This report supports the implementation of commitments made by Member States of the Southern African Development Community (SADC) to align the regulation of their financial sectors with international standards. These commitments are contained in the Protocol on Finance and Investment (FIP) which was adopted by the SADC Summit in 2006 and subsequently ratified (and thus came into force) on 16 April 2010. The report entails an assessment of the degree to which regulatory approaches accommodate financial sector development and financial inclusion as guided by the IAIS Application Paper on Regulation and Supervision Supporting Inclusive Insurance Markets.
FinMark Trust partnered with the CISNA secretariat to support this project. Its interest is to support the regional integration process in the area of inclusive financial services (insurance in this case) and to ensure that regulatory harmonisation is tailored to the domestic priorities and constraints of member countries.
Inside the report
SADC faces high levels of exclusion in insurance. It is therefore appropriate for SADC supervisors to pursue inclusive insurance markets based on international guidance. Since the vast majority of SADC populations are excluded from insurance, it also holds that retail markets are extremely small. Microinsurance can therefore form a foundation for building the overall retail insurance market.
The document contains three sections:
- The market analysis provides an overview of the current level of development of national insurance markets in SADC focusing on population size and income levels , the risk experience of the target market, the players in the formal insurance market as well as the size of the formal market, and also considers informal risk mechanisms being utilised in the various countries. This provides context to the rest of the discussion but also illustrates the market drivers of regulatory approaches.
- The section on market risks discusses the key risks perceived by the SADC insurance supervisors, as regulatory design and enforcement is often driven by these. This may range from consumer protection risks (e.g. particular abuses occurring in segments of the market) through to threats to market stability (e.g. where providers are not financially sound or able to comply with reserve requirements).
- Finally the regulatory section seeks to understand how facilitative the national insurance regulation within SADC Member States for the development of inclusive insurance markets is. Whilst at the same time providing the background information for crafting proposed guidance for the harmonisation of regulatory frameworks in the area of microinsurance. In respect of each regulatory topic, the relevant guidance provided by the IAIS Application Paper on Regulation and Supervision Supporting Inclusive Insurance Markets is reflected and used as a benchmark for the evaluation of existing regimes in SADC.
This document therefore takes a holistic approach to examining the current state of access to insurance in SADC, whilst also examining the potential for greater harmonisation of approaches across countries to providing insurance to the unserved within the region.
Review of the History and Legislative Landscape of the South African Market for Hospital Cash Plan Insurance
Cenfri, on behalf of FinMark Trust, recently commissioned a Review of the History and Legislative Landscape of the South African Market for Hospital Cash Plan Insurance, conducted by Lighthouse Actuarial Consulting. The review was a follow-up to the study on the Review of the South African Market for Hospital Cash Plan Insurance completed in 2012, which illustrated the potential for Hospital Cash Plan (HCP) products to provide financial protection against health risks to those that are unable to afford medical scheme membership, but still incur significant costs/co-payments at a public facility.
The follow-up note provides an overview of the history and development of the regulatory landscape for HCP products. It also serves as an update on the proposed revised demarcation between HCPs and medical schemes and highlights the expected implications thereof.
9th International Microinsurance Conference
At the 9th International Microinsurance Conference hosted by the Munich Re Foundation and the Microinsurance Network in Jakarta, Indonesia Cenfri presented the following work on behalf of the FinMark Trust and the ILO's Microinsurance Innovation Facility
- Herman Smit presented the Business Case for Retailers from Cenfri's work with FinMark Trust at the parallel session on Distribution: Selling microinsurance profitably. Please click here to download the presentation (PDF, 1.65MB)
- Mia Thom presented Scale: Thinking Big from Cenfri's work the ILO's Microinsurance Innovation Facility at the parallel session on Drivers of Scale. Please click here to download the presentation (PDF, 0.8MB)
- Jeremy Leach presented Understanding the Impact of m-insurance Failures from BFA/Cenfri's work with FinMark Trust at the parallel session on Failures. Please click here to download the presentation (PDF, 0.9MB); and Exploring new frontiers: the potential of micro-insurance investments from BFA/Cenfri's work with the Microinsurance Network at the parrallel session on Impact Investment. Please click here to download the presentation (PDF, 0.3MB)
1st Consultative Forum Jakarta, Indonesia (2013): Microinsurance business models, risks and regulatory implications
It has now been five years since the findings from the original five A2ii microinsurance diagnostics in Colombia, India, the Philippines, South Africa and Uganda were synthesised and key themes extracted and disseminated through a series of focus notes. The process elicited insights into how regulation affected the evolution of these microinsurance markets and provided a guide for policy-makers, regulators and supervisors looking to support the development of microinsurance in their jurisdiction.
Since then, diagnostic studies have been rolled out in more than 10 further countries, prompting the A2ii to embark on a new round of cross-country synthesis to extract key overarching themes. This cross-country synthesis is conducted by Cenfri on behalf of FinMark Trust and with co-funding from GIZ. It comprises two outputs:
- Identifying evolving microinsurance business models and their regulatory implications.
- Analysing the overall regulatory approaches to catalyse microinsurance market development, considering what triggers each specific approach so as to inform regulators and supervisors in the decision of what the most appropriate approach would be in their context.
The findings from the first output were presented by Stefanie Zinsmeyer of the A2ii at the first Consultative Forum faciliated by Véronique Faber and hosted by the Microinsurance Network and the International Association of Insurance Supervisors (IAIS) in Jakarta, Indonesia on Tuesday November 12, 2013.
The findings are also used as input to the forthcoming IAIS Issues Paper on Market Conduct, Distribution and Consumer Protection in Inclusive Insurance Markets.
Main findings from focus group discussions (FGDs) in Mozambique
Cenfri recently released a summary of the main findings from the focus group discussions (FGDs) in Mozambique conducted and authored by the International Capital Corporation (ICC) of Mozambique. The FGDs form part of the demand-side analysis inputs into the forthcoming Access to Insurance Diagnostic in Mozambique commissioned by the United Nations Capital Development Fund (UNCDF) and Gesellschaftfür Internationale Zusammenarbeit (GIZ) in Mozambique and funded in partnership with the FinMark Trust.
At the core of the diagnostics is the demand-side analysis which uses a combination of qualitative and quantitative survey techniques to understand the low-income market's experience of risk, the severity of different risks and their interaction with insurance where conducive. FGDs are used to draw out qualiative insights that provide a deeper undertanding of perceptions and the motivation behind behavior. This provides a key input into the diagnostic which aims to identify the barriers to and opportunities for insurance market development, on the basis of which regulatory and market-related recommendations are then made for future development.
Cenfri Learning Journey (2012)
Cenfri and the ILO's Microinsurance Innovation Facility have partnered to achieve the common goal of increasing the availability of better insurance products to a greater number of low-income households on the African continent. As an output to the partnership, Cenfri documents emerging lessons learned from its microinsurance activities. In an effort to share these emerging lessons with the wider microinsurance community, Cenfri in collaboration with the ILO's Microinsurance Innovation Facility has drafted a learning journey that chronicles Cenfri's research activites in 2012.
The document has the following structure:
- Section 1 explores Cenfri's approach to research
- Section 2 identifies common barriers to microinsurance market development emerging from the diagnostics conducted in China, Mozambique and Tanzania
- Section 3 reviews the emerging lessons from a study tour reviewing microinsurance business model innovations in Latin America by a South African insurer and retailer
- Section 4 provides insights from the review of the low-cost insurance product standards developed by the industry in South Africa to promote activity in the low-income market
- Section 5 looks ahead to the activities planned by the ILO's Microinsurance Innovation Facility and Cenfri for 2013
Microinsurance readiness assessment of the Old Apostolic Church
Cenfri recently released a Microinsurance readiness assessment of the Old Apostolic Church (OAC) Burial Society as a potential candidate for the new microinsurance framework proposed in the 2011 Policy Document.
The assessment was funded by FinMark Trust as part of their on-going support to microinsurance development in South Africa. The assessment is intended to inform both the OAC Burial Society's compliance strategy as well as the National Treasury and Financial Services Board finalisation of the regulation.
The nature of informality in the South African funeral services market - implications for policymakers and regulators
Funeral insurance is the most prevalent form of insurance in South Africa with just less than 90% of all risk cover being attributed to this form of insurance, more than a quarter of which is informal.
Cenfri recently released a study on the nature of informality in the South African funeral services market. The study was funded by the International Development Research Centre, Ottawa, Canada and set out to understand what the implications of the new South Africa Microinsurance Policy Framework will be on the funeral assistance business.
The study aims to provide empirical evidence to address new questions arising from interventions set forth by the government:
- What is the nature of informality in funeral service market?
- What are the drivers of informality which translate to barriers to formalisation?
- What would be the implications of the proposed formalisation on the industry based on how insurance provision by funeral service providers works in practice?
- What insights can regulators take into account when finalising the microinsurance regulatory framework and the approach to formalisation?
ILO's Microinsurance Innovation Facility Annual Report (2012)
As one of the ILO’s Microinsurance Innovation Facility’s official partners Cenfri is pleased to announce the release of the Microinsurance Innovation Facility's 2012 Annual Report.
The ILO's Microinsurance Innovation Facility and Cenfri have partnered to achieve the common objective of increasing the availability of better insurance products to a greater number of low-income households on the African continent. The Facility's Annual Report contributes to this by documenting the learnings from existing microinsurance activities, which will help to understand the success factors necessary for the development of valuable microinsurance products
The Microinsurance Innovation Facility's 2012 annual report is organized as follows:
- Part 1 summarizes the Facility’s 2012 accomplishments and thoughts on their next phase of operation, beginning in 2014
- Part 2 describes microinsurance development and the experiences of the Facility’s partners across the world
- Part 3 presents lessons and new findings in microinsurance that were generated by the Facility’s partners
- The Annexes list:
- Facility’s innovation grantees and strategic partners (Annex I)
- knowledge products (Annex II)
- capacity-building activities (Annex III)
Tanzania Access to Insurance Diagnostic
Cenfri recently released the Tanzania Access to Insurance Diagnostic study on behalf of FinMark Trust. The study was funded as partnership between Financial Sector Deepening Trust Tanzania (FSDT) and FinMark Trust, with the support of the Tanzania Insurance Regulatory Authority (TIRA).
The study comprises a series of 8 documents consisting of one headline findings summary document and seven input documents, each focusing on a specific thematic area, that build up the evidence base to headline findings.
The series was designed so that readers can focus on the Headline Findings document, drawing on specific input documents for the evidence base and as per their area of interest.
Click read more below to access the main Tanzania Access to Insurance Diagnostic homepage with the complete list of documents
Kenya microinsurance landscape: Market and regulatory analysis (2010)
"If only 1 million M-PESA users and 1 million Kenyans with bank accounts who are currently uninsured buy insurance through these channels, market size will increase by more than three-fold from 3% to 10% of Kenyan adults."
This is just one of the many opportunities and findings from the recently completed Cenfri study, commissioned by the Insurance Regulatory Authority (IRA) of Kenya and funded by the International Labour Organization (ILO), United Nations Capital Development Fund (UNCDF) and Financial Sector Deepening Trust Kenya (FSDK) to consider the opportunities and challenges to microinsurance development in Kenya.
Review of Mzansi and Zimele product standards (2011)
Insurance usage in South Africa has for a long time been out of reach of the majority of the low-income population. For instance, in 2004, the FinScope survey of financial services usage reported that only 13% of the country’s low-income population (in South Africa, this income category is referred to as LSM 1 - 5) had at least one long-term insurance product. For the short-term side, the usage figure for the same income category was estimated at less than 1%. To address this and as a consequence of the Financial Sector Charter, the insurance industry embarked on a set of initiatives whose aim was to increase insurance usage among the low-income black population in South Africa. A key aspect of the initiative was the development and implementation of voluntary product standards that would ensure the delivery of appropriate products that met the specific insurance needs of LSM 1 – 5. To this end, the Mzansi and Zimele product standards were launched in 2006 and 2007 respectively by the short-term and long-term insurance industries. In addition, the Association of Collective Investments also embarked on a similar initiative to increase the level savings in the low-income space through the development of the Fundisa education savings product. This study, therefore, aims to review the performance of these industry initiatives in enhancing access to insurance and savings products within the low-income population in South Africa. This project was funded by the South Africa Insurance Association (SAIA), Old Mutual and the FinMark Trust.
Funeral insurance (2011)
Cenfri prepared a paper on funeral insurance as input to the forthcoming second edition of the Microinsurance Compendium. It considers the demand for funeral insurance and the unique supply and distribution characteristics thereof in a number of countries, as well as the consumer vulnerabilities typically related to funeral insurance and how it can be overcome. The paper has also been published as ILO Microinsurance Innovation Facility Microinsurance Paper no. 10.
Opportunities for insurance inclusion in Nigeria (2011)
Cenfri was commissioned by Enhancing Financial Innovation & Access (EFInA) to explore the potential in the Nigerian insurance market using data from the EFInA Access to Financial (A2F) Services in Nigeria 2008 and 2010 survey. The study aims to demonstrate the market opportunities to insurance companies and other market practitioners.
Cenfri staff presented findings of this study at EFInA's Innovation Forum in Lagos, 22 September 2011.