Key issues in the licensing, supervision and regulation of microinsurance and mutuals (by AM Best, USA)ision of microinsurance in Cambodia

Andrea E. Keenan
Vice President – Research & Ratings Criteria
Key Issues in the Licensing, Supervision
and Regulation of Microinsurance and
Mutuals
September 20, 2013
A.M. Best - Oldwick, NJ
ICMIF-AOA Development Network
Seminar

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September 20, 2013ICMIF-AOA Development Network Seminar

Agenda
1. Insurance Regulation Standard Objectives
2. Current Global Climate for Insurance Regulators
3. The Fit of Microinsurance (and Mutuals) into This
Framework

Regulators and Microinsurance
• Regulators have two major objectives:
1. Ensure the protection of policyholders.
2. Provide access to insurance to the population.

1. Microinsurance and Policyholder Protection
• Providers of insurance in a domicile must be
regulated for the protection of their customers.
• But, regulations are often too high-cost to be within
the business plan of a viable microinsurer.

2. Microinsurance and Access to Insurance
• Microinsurance is an attractive solution to regulators
who are focused on risk protection reaching the less
wealthy populations.
• But, regulations are often too high-cost to be within
the business plan of a viable microinsurer.

Global Regulatory Framework
Standard Setting Bodies
G-20
IMF
International Currency
FX Stability
Emergency Funds
FSAPs
World Bank
Economic Development
Poverty Reduction
Microinsurance
Financial Stability Board (FSB)
Devises, coordinates and monitors
implementation of global financial
regulations
BCBS
FASB
IOSCO IAIS

G-20
• The Group of Twenty (G-20)
Finance Ministers and Central
Bank Governors was
established in 1999.
– Financial crises of late 1990s.
• Predecessors:
– G-7
– G-22
– G-33
• Common theme: reduce the
world economy's susceptibility
to crises.

G-20
• 2012 Mexico Presidency
– “Financial inclusion is a key
component in the
development of
healthy, vibrant and stable
financial systems contributing
to sustainable economic
growth.”
• 2013 Russia Presidency
– Build off of 2012 theme with a
focus on financial literacy and
access to financial services
by women, migrants and the
youth.

Global Regulatory Framework: IMF &
World Bank
• International Monetary Fund
– Financial Stability
Assessment Program
• World Bank
– Educational assistance
– Financial Assistance
– Microinsurance Initiatives
and Technical Expertise
20
IMF
FX Stability
Emergency Funds
FSAPs
World Bank
Poverty Reduction
Microinsurance

Global Regulatory Framework: IAIS
• Established in 1994.
• Sets standards “Insurance Core
Principles.”
• IAIS’s G20 Mandate
– Systemic Risk and Group
Regulation
– Financial Inclusion
Standard Setting Bodies
G-20
IMF
FX Stability
Emergency Funds
FSAPs
World Bank
Poverty Reduction
Microinsurance
Financial Stability Board (FSB)
Devises, coordinates and monitors
implementation of global financial
regulations
BCBS
FASB
IOSCO IAIS

International Association of Insurance
Supervisors (IAIS)
• IAIS and Financial Inclusion
– Joint Working Group (JWG) on Microinsurance
• 2012 established Financial Inclusion Subcommittee
– Current / Recent Microinsurance Work
• Application Paper on Regulation and Supervision
Supporting Inclusive Insurance Markets
Concluded October 2012
• Issues Paper on Market Conduct, Distribution and
Consumer Protection in Inclusive Insurance Markets
Draft Paper 2013
– Application Paper on Mutuals, Cooperatives and
Community-Based Organizations Drafting begun July 2013

Microinsurance a Natural Fit

Making Micro Possible

IAIS Issues Paper 2013
• Making Insurance Approachable and Accessible to the
Targeted Groups
– Financial Literacy
– Product Design and Policy Language
• Creating Client Value
– Claims Settlement and Payments
– Complaints Handling
• Sustainable Industry
– Performance of Insurers

Conclusions
• State of Global Regulation Currently is Accommodating
for Development of Financial Inclusion
– Encourages Global Attention on Innovations in
Microinsurance
– Mutual and Cooperative Organizations Have an
Important Role to Play
• Global Community Benefits from Communication of
Country-Level Experiences

Andrea E. Keenan
Vice President – Research & Ratings Criteria
Thank You
ICMIF-AOA Development Network Seminar
September 20, 2013
A.M. Best - Oldwick, NJ

Key issues in the licensing, supervision and regulation of microinsurance and mutuals (by AM Best, USA)ision of microinsurance in Cambodia

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