MR Microinsurance_2012_03_29.indd - International Labour ...

584 Infrastructure and environment for microinsurance
using tied agents should be responsible under law for any mis-selling or
malfeasance on the part of its agents.
Where intermediaries jointly brand a product with an insurer, there could be
two options. Either the intermediary could be required to stand behind the
product, or regulation could require that the ultimate insurer meet a minimum
prudential standard and retain responsibility for the actions of its intermediary.
To compensate for these applications of regulatory proportionality, all microinsurance
intermediaries should be formally licensed or registered by the supervisor.
Furthermore, relevant staff of an intermediary specializing in microinsurance
should be subject to simplified agent training and certification. The
supervisor should also have the power to transfer a portfolio of insurance policies
to another intermediary and/or insurer if necessary, so as to ensure that the policyholders
continue to benefit from cover.
In all cases, where the intermediary handles premiums and claims management,
it should be able to demonstrate that policyholder moneys are de facto
held separately from its own funds, that adequate systems are in place (computerized
or paper-based) to identify and ensure the policyholder’s rights, and that
the underwriter’s records are updated regularly (at least weekly).
Claims management
Claims payment systems can be critical to build trust and enhance the success of a
microinsurance arrangement, due to the powerful demonstration effect of good or
poor performance. Findings from the Kenya consumer research suggest that it is
important for regulators to monitor this issue and intervene if substantial problems
are evident, for example, by setting standards on timeliness and fairness of claims
processes. Surveys carried out in India indicate that a settlement period of up to
four weeks may be acceptable for the economically active poor, although given their
low and variable incomes, sooner would certainly be better. In the Philippines, the
Microinsurance Framework sets a 10-day limit. A number of microinsurance initiatives
involving broker facilitators or other aggregators such as self-help groups permit
the payment of valid claims immediately, without prior assessment by the
underwriter or its adjusters. For example, a large microinsurance pilot in the
Vizianagaram District of Andhra Pradesh uses a call centre and direct electronic
transfer to ATMs to speed up the claims process. Weather-insurance products have
also been designed in part to facilitate more timely claims settlement.
As a standard practice, any well-run microinsurer or its value chain associates
should be recording and analysing its claims performance regardless of supervisory
requirements. The supervisor or consumer protection authority should
monitor claims performance, both for purposes of consumer welfare and in its
development and prudential roles. To this end, microinsurers or their associated
intermediaries should be required to report on a periodic basis on the number of