MR Microinsurance_2012_03_29.indd - International Labour ...

572 Infrastructure and environment for microinsurance
cognizant of the potential impact that access to insurance can have on economic
growth and the eradication of poverty.
Policies for improving access should have clear and measurable objectives and
their effectiveness should be monitored through transparent public reporting. In
particular, the effectiveness of regulation in facilitating and expanding access
should be assessed. Whilst appropriate and reliable data are a useful support to
designing an appropriate policy, the absence of data does the opposite, which can
diminish consumer confidence and deter potential consumers from buying
insurance. In addition, a lack of effective supervision can discourage foreign and
domestic investors from supplying capital, retard insurance market efficiency and
dampen industry development.
Achieving the appropriate balance between safety and soundness on one
hand, and facilitating growth and development on the other, is particularly difficult
in cases where innovative approaches, new services and untested business
models figure prominently. Unanticipated risks can emerge down the road while
perceived risks can generate overly cautious regulatory approaches. Since a
deeper knowledge of the actual risks will emerge as markets mature, regulations
need to evolve over time and allow for incremental adjustments to help achieve
regulatory balance.
Regulatory initiatives emanating from the IAIS are attempting to address the
challenges of compliance with global insurance standards in specific circumstances.
Based on country studies facilitated by the Access to Insurance Initiative,
and in close dialogue with insurance supervisors, work is under way to understand
how proportionality principles can be used in crafting a regulatory and
supervisory framework, which in turn can create the right incentives to promote
access in different economic and socio-cultural settings.
Designing and implementing such a framework will require concomitant
steps to strengthen the capacity of policymakers, regulators and supervisors so
that they can make greater use of regulatory judgment to identify opportunities
and problems early. It will also require a new supervisory approach, moving away
from the one-size-fits-all strategy. In doing so, they would need to dialogue with
stakeholders and examine the structure of their domestic insurance industry and
current and prospective microinsurance delivery channels.