Responsible Finance Forum

Proportionate Regulatory Frameworks in Inclusive Insurance: Lessons from a Decade of Microinsurance Regulation

22 November 2016

It is just over a decade since the first microinsurance regulation was introduced in India in 2005. In this booklet, we look back at what supervisory approaches have been undertaken since then, and draw lessons from the past. We also look forward and examine some of the ongoing and emerging challenges insurance supervisors find themselves confronted with, particularly with regard to formalization, data, government involvement, mass distribution and digital technology.

In many ways, regulatory constructs and assumptions no longer apply in the same way. Supervisors now have to deal with relationships that did not exist in the past. For example, the commercial insurer was traditionally the strongest party in the insurance value chain; in the inclusive insurance space, it is often now secondary to new types of intermediaries such as retailers or mobile network operators (MNOs).

Governments are also increasingly designing large-scale insurance initiatives, sometimes also acting as risk carriers driven by policy agendas outside of the financial sector such as climate change or food security. Underlying all these changes are the new risks emerging from technological innovations. These advances are forcing a shift in how supervisors think and their ensuing regulatory approach.