ClydeCo-Resilience-Inclusive Insurance Report


In some jurisdictions, the insurance supervisor may set requirements for products classed asmicroinsurance to have certain standard product parameters or features. This might include standardised wordings designed to build consumer trust and encourage an insurance culture to take root. Common requirements for “microinsurance” products include grace periods, maximum waiting periods, and restrictions on the number and type of exclusions in a policy. The period for claims settlement may be strictly defined and can be amatter of days. There may be a cap on the policy benefit or a premium ceiling to ensure that the product targets low-income populations or in order to limit prudential risks. Some jurisdictions will require approval of products on a case-by-case basis, such as in China and Brazil.

Standardisation can potentially lower costs in the early stages of product development and may encourage more players to enter the market. However, the risk is that it can restrict innovation and reduce product choice for customers, so there is less differentiation between insurers as markets mature. Hannah Grant at A2ii considers that there are “a number of ways that an insurance supervisor can foster inclusive insurance. A supervisor may need to think more flexibly in allowing insurance to be purchased via mobile phones with no need for physical signatures or paper follow- up. For those without financial literacy a supervisor may adopt provisions to protect low income people such as having a shorter claims payment period (as those with lower income can’t wait for a claims payment) or allowing some flexibility regarding premium payments, because policyholders aren’t earning regularly. There may be requirements for disclosures to be made in the local language.”

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