MR Microinsurance_2012_03_29.indd - International Labour ...

592 Infrastructure and environment for microinsurance
26.5 Emerging good practices
A number of emerging good practices have been identified that might form the
core of a proportionate consumer protection regime for microinsurance. Before
they could form the basis of any normative regulatory recommendations, however,
they would need to be tested on the ground and tailored to context. The
practices are categorized under the three broad consumer-protection goals of
transparency, fair treatment and effective recourse.
1) Transparency:
– Require that the client knows who the ultimate insurer is, e.g. when the insurer’s name
is clearly stated in the sales documents, the policy and any “Key Facts” documents.
– Require adequate and comprehensible disclosure of the price of the policy, what
it does (and does not) provide, the premium payment obligations, when and
how a claim can be made under the contract, and for how much, including any
exclusions or limitations on cover arising out of explicit or implied warranties.
– Require adequate and comprehensible disclosure of claims procedures and how
to access recourse mechanisms if things do not go as expected.
– Given the profile of microinsurance consumers, such disclosures will need to be
as simple, comprehensible and accessible as possible to those with lower levels of
income, experience and formal education. Standardization of disclosure formats
and wordings can help facilitate consumer understanding and comparison of the
different products available.
2) Fair treatment:
– Require mechanisms to be in place that will mitigate the impact of high-pressure
sales practices by ensuring that potential consumers have time to consider the
suitability and value for money of the product(s) on offer. Examples of such
mechanisms include post-sale call-back by the insurer (using electronic means
where possible) and free look periods (see section 26.3).
– Give attention to the effect of overly obtuse wording, especially if it limits the
delivery of insurance services when customers might otherwise expect that they
would be delivered, and consider encouraging operators to offer relatively simple
products (e.g. those with standard wordings or restrictions on arcane exclusions
and warranties).
– Allow product bundling when it affords benefits (e.g. cost savings or convenience)
to customers as well as the provider, subject to suitability and disclosure
requirements being met. 23
23 While bundling may occur at point of sale, the different products may still be effectively provided by
different institutions.