Leading from the front

Leading from the front

10 July, 2020    

Why visible and proactive policy leadership matters more than ever for insurance in the wake of COVID-19

As we discussed in our first blog in this series, our deep dive studies[1] across four Sub-Saharan Africa countries show that insurance matters for sustainable development and growth on three fronts: by building household resilience, by supporting business resilience and growth, and by supporting capital market development. We found that, for insurance to fulfil its potential in all these roles, a competitive and competent insurance sector is needed, but also a strong policymaker and regulator to provide an environment that fosters development.

Policy leadership sets the tone

There is a strong co-dependence between the role of the policymaker and that of insurance regulators. If the policymaker deliberately positions insurance as a tool for economic development, the insurance regulator will be empowered to regulate and supervise to achieve these objectives.

Through our deep dives, we identified four key roles for policymakers:

  • Direction: Visible and proactive policy leadership provides a clear vision of change and the policy direction required to achieve such change.
  • Mandate: Effective policy leadership then gives the regulator the mandate to deliver on policy objectives.
  • Coordination: Thirdly, policymakers coordinate and convene the right stakeholders to make change happen.
  • Monitoring: Finally, the policy-derived mandate provides the framework for monitoring progress.

Then COVID-19 hit, begging the question: are these key policymaker roles still relevant in the face of the pandemic?

A crisis calls for leadership

Over the past few weeks, in collaboration with FSD Africa, we’ve been taking stock of the impact of COVID-19 and the associated lockdown measures on insurance. We are speaking to a range of insurers and insurance regulatory authorities in sub-Saharan Africa (SSA) to find out how the pandemic is affecting their own internal operations, as well as the products and services that they provide or oversee. One clear message emerging is that leadership matters more than ever in times of flux. The COVID crisis has challenged ministries, across the board, to take leadership.

In the test tube of the current crisis, let’s take a look at how each of the policy roles manifests.


Setting the course. Though regulators are the ones to implement COVID response measures, the national response is set at the policy level. In South Africa, for example, the cabinet identified the lockdown approach and measures – and was widely applauded for the “formidable leadership” provided. In the insurance sphere, the financial sector regulators, the Financial Services Conduct Authority (FSCA) and the Prudential Authority (PA), were then responsible for developing the implementing regulations, plus to provide guidance on operating protocols.


Relevant action, fast. The pandemic can shape perceptions of insurance. Should insurers prioritise fine-print exclusions above delivering on people’s needs, it might create a trust deficit that may take years to overcome. A development mandate gives the regulator the flexibility and responsibility to respond swiftly to prevent such a fall-out. For example, SA’s FSCA is encouraging insurers to allow grace periods for missed premium payments and the Insurance Regulatory Authority (IRA) Uganda is advocating for premium holidays and flexibility regarding grace periods. The IRA in Kenya has made it a requirement that the insurance industry honour all COVID-related claims in life and health, even if pandemics are excluded on their policies.

Promoting innovation. The lockdown measures have necessitated immediate innovations, for example non-face-to-face sales, e-signatures or alternative ways to conduct onsite supervision. More fundamentally, it is clear from our interviews that innovation will be crucial to support the role of insurance in the recovery of the economy. In a number of jurisdictions, regulators are applying their market development mandate to harness innovation: IRA Uganda is running a hackathon with the Fintech association for innovators with COVID-related responses. South Africa’s FSCA launched a fintech innovation hub during the lockdown period to harness financial sector innovation for the economic recovery.


“Command centre” for meaningful coordination. Coordination is even more crucial now. A coherent, logical response that is clearly communicated to industry enables a thoughtful and rapid response to the changing context. In South Africa, the FSCA, PA and National Treasury meet daily to discuss developments and responses in the financial sector. They also meet weekly with the industry associations (compared to quarterly before the crisis). As policymaker, National Treasury has an important role to “house” such coordination. In contrast, Malawian insurers highlighted limited guidance from the Reserve Bank as adding to their overall uncertainty.


A broader measurement approach. The pandemic prompted a move to electronic monitoring for supervisors still relying on paper-based submissions. For example, the IRA in Kenya has implemented online submission of audited accounts and returns. But the COVID crisis brings home the need to also broaden the framework of what is monitored, to gauge the role of insurance in protecting policyholders against the impact of the crisis and in helping to drive the recovery. Under the A2ii-IAIS regional implementation platform for SSA, a group of supervisors have formed a steering group to oversee the development of an expanded list of key performance indicators that includes insurance market development and insurance for sustainable development. Such an expanded measurement scope will be particularly relevant in light of the pandemic.

Mandate shapes measurement. An expanded monitoring focus follows when regulatory authorities are held accountable not only for prudential and market conduct outcomes, but also for insurance market development and, beyond that, the role of insurance in development. And this mandate derives from the policy level.

Leadership when it matters

The adage goes “let’s not waste a good crisis”. Time will tell what the exact impact on insurance markets will be, but for now our conversations are showing just how important leadership is in times of crisis. While it is the regulator that is tasked to take action, it is the stance of the policymaker that sets the tone for a decisive and coordinated regulatory response. Ultimately, we believe that a combination of direction, mandate, coordination and monitoring will shape insurance market outcomes and encourage the type of innovation needed to ensure that insurance carries its weight in maintaining and building resilience in the aftermath of the crisis.

[1] In 2018, the Department for International Development (DFID), the Centre for Disaster Protection, FSD Africa, Cenfri and the World Bank partnered to conduct in-depth diagnostic studies of the insurance markets in Ghana, Kenya, Nigeria and Rwanda. By analysing consumer and business data, taking a close look at regulation and talking to a range of in-country stakeholders, we explored the role of insurance in the economy.

This work forms part of the Risk, Remittances and Integrity programme, a partnership between FSD Africa and Cenfri.

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