Toward an efficient and sustainable Microinsurance market: The regulatory perspective

Ahsan, Syed M. and Barua, Shubhasish and Tax, Jaimie (2010): Toward an efficient and sustainable Microinsurance market: The regulatory perspective. Published in: Macro Dynamics of Micro Finance (2010): pp. 583-603.

Abstract

While both microcredit and microinsurance products in the developing world have essentially emerged in a regulatory vacuum, the general consensus appears to be that self-regulation may have thus far served the global microcredit industry adequately. The same premise is likely to be false when it comes to microinsurance since diffusion of the essence of insurance among the poor has proven non-trivial. The regulatory framework therefore has to target multiple goals such as to foster market innovations (in terms of product design and the institutional delivery mechanism), to protect the policy holder (i.e., achieving “cost efficiency” and “sustainability”) and at the same time to ensure that insurance services remain inclusive and compatible with the needs of the poor. Accomplishing these goals within a single regulatory framework requires a fine balance. This paper deliberates on how to craft a set of regulatory statutes that would be relevant for the microinsurance industry in consonance with these goals.

• Item Type: MPRA Paper
• Language: English
• Keywords: Microinsurance, poverty & vulnerability, prudential regulation, reporting standards
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation

References

Ahmed, M. U., et al (2005): “Health Micro Insurance: A Comparative Study of three Examples in Bangladesh”, CGAP Working Group on Microinsurance, Case Study # 13, World bank Group,Washington, DC.

Ahsan, Syed M (2009), “Microinsurance, Poverty and Vulnerability”, in Lazar, D., and M. Deo, Eds. Micro Finance: Performance Evaluation and Enterprise Development, 504-15, Allied Publishers, Chennai, January 2009.

Ali, Mortuza K. M. (2002), “Requirements for Providing Sustainable Health Care and Health Insurance Schemes in Bangladesh”, Insurance Journal, 53, pp.

Bester, H. et al (2008), “Facilitating Inclusive Financial Markets: The Role of Regulation in the Development of Microinsurance”, FinMark Trust, Johannesburg (www.finmarktrust.org.za)

Christen, Robert. P., Timothy R. Lyman and Richard Rosenberg (2003) “Microfinance Consensus Guidelines: Guiding Principles on Regulation and Supervision of Microfinance”, CGAP, The World Bank Group, Washington, DC, July (www.cgap.org).

Churchill, Craig (2006a), Ed., Protecting the Poor: A Microinsurance Compendium, ILO.

Churchill, Craig (2006b), “What is Insurance for the Poor?” Chapter 1, in Churchill (2006a).

Churchill, Craig (2007), “Insuring the Low-income Market: Challenges and Solutions to Commercial Insures”, The Geneva Papers, 32, 401-412.

Delta Life Insurance (2004), “Annual Report 2004” (www.deltalife.org)

Denis Garand, John (2008), “Performance Indicators for Microinsurance”, Ada Microfinance Expertise.

Dror, David M., et al, (2007), “Health Insurance Benefit Packages Prioritized by Low-income Clients in India: Three Criteria to Estimate Effectiveness of Choice”, Social Science & Medicine 64, 884–896

Dror, David M. (2007) “Micro Health Insurance in India: Pointers for Progress”, IRDA Journal, November, 7-11.

Hasan, Rashed Al (2007), “Reducing Vulnerability of the Poor Through Social Security Products, A market Survey on Microinsurance in Bangladesh” INAFI, Bangladesh.

Gine, Xavier, Robert Townsend and James Vickery, (2007) “Patterns of Rainfall Insurance Participation in Rural India”, World Bank, mimeo.

IAIS (2007), “Issue in Regulation and Supervision of Microinsurance”.

IRDA (2002), “Insurance Regulatory and Development Authority Regulations, 2002”, The Gazette of India, New Delhi.

IRDA (2002), “Insurance Regulatory and Development Authority Regulations (Microinsurance), 2005”, The Gazette of India, New Delhi. Jowett et al. (2007), “Microinsurance Innovations Project (MIP) in the Philippines”, GTZ.

Khalily, Baqui et al (2008), “Micro Insurance in Bangladesh- Present State and Future Challenges”, Institute of Microfinance, Dhaka. KPMG (2008) website.

McCord, Michael J. (2008), “Visions of the Future of Microinsurance, and Thoughts on Getting There”, Microinsurance Note # 9, USAID.

MRA (2006), “The Microcredit Regulatory Act 2006” (www.mra.bd.org)

Pauly, Mark V. (2008), “The Evolution of Health Insurance in India and china”, Health Affairs 27(4), 1016-19. Radcliffe, D and R. Tripathi (2006) “Sharpening the Debate: Assessing the Key Constraints in Indian Micro Credit Regulation”, Working Paper Series, Institute for Financial Management and Research, Centre for Micro Finance, Chennai, India (www.ifmr.ac.in).

Sa-Dhan (2006), Voluntary Mutual Code of Conduct for Microfinance Institutions, March (www.Sa-Dhan.org). Sajida Foundation (2006), Annual Report.

Uddin, Mohammad Sohrab, (2009), “Microinsurance in Bangladesh: A Review of Current Situation and Challenges for Further Development”, Keynote paper presented at a seminar organized by Bangladesh Insurance Association and Bangladesh Insurance Academy, Dhaka, March 24.

Wiedmaier-Pfister, Martina and Arup Chatterjee (2006), “An Enabling Regulatory Environment for Microinsurance”, in Churchill, Craig, Ed. The Microinsurance Compendium, ILO, Geneva.