WWW.BOOK.DISLIB.INFO
FREE ELECTRONIC LIBRARY - Books, dissertations, abstract
 
<< HOME
CONTACTS



Pages:     | 1 |   ...   | 84 | 85 || 87 | 88 |   ...   | 108 |

«Protecting the poor A microinsurance compendium Edited by Craig Churchill Protecting the poor A microinsurance compendium Protecting the poor A ...»

-- [ Page 86 ] --

The area of responsibility is an additional problem. Although insurance supervisors are responsible for implementing insurance regulations, microinsurance providers often operate under other authorities, such as a cooperative commission, the NGO Bureau or the health ministry. Consequently, these schemes are not seen as part of the insurance sector, even though they clearly provide insurance services. Moreover, the people responsible for supervising them generally do not have the expertise and systems to perform such supervision (see Box 92).

Insurance cooperatives in MalawiBox 92

In Malawi, the Supervision Department of the Reserve Bank of Malawi is entrusted with the task of regulating and supervising the insurance sector. The Department has limited resources; its main supervisory approach is to scrutinize reports from insurance companies. It is aware that the credit union association Malawian Union of Savings and Credit Cooperatives (MUSCCO) provides life insurance to more than 55,000 low-income persons, but claims that since MUSCCO is registered as a cooperative, it does not have the jurisdiction to support or control its activities. However, the Registrar of Cooperatives under which MUSCCO operates lacks resources, skills and interest to supervise insurance activities.

Source: Adapted from Enarsson and Wirén, 2005.

494 The role of other stakeholders The very existence of informal insurance suggests that existing laws and regulations in some ways impede the inclusiveness of the formal insurance market. The question for insurance authorities and policymakers is: what should they do to remedy this situation? Leach (2005) identifies the balancing of stability and access as a regulator’s dilemma.5 Should they try to formalize informal schemes to enhance consumer protection, which could stretch supervisors’ resources to the breaking point? Should they shut down informal schemes since they are essentially illegal? If informal schemes are allowed to operate, how should they determine the threshold that triggers regulatory intervention? Or is there some middle ground that could expand access to insurance with some degree of consumer protection?

2 Barriers in existing regulatory frameworks There are conflicting views among insurance supervisors on the extent to which regulations should be adapted to the specific characteristics of microinsurance. According to a survey conducted by the IAIS, the majority of supervisors believe that the existing laws and regulations in their jurisdictions do not discourage microinsurance. However, very few jurisdictions have laws or regulations adapted to encourage microinsurance. This section considers the regulatory barriers that limit the creation of microinsurance companies as well as those that impede the proliferation of microinsurance products.

2.1 Regulatory barriers to creating formal microinsurance institutions A cautious approach treating microinsurance on a par with commercial life and non-life insurance actually discourages the development of microinsurance. Such a “one-size fits-all” policy makes the job of the supervisor easier, but lacks a convincing rationale. The insurance requirements described below are barriers to microinsurance formalization.

Where there is only one institutional option, high capital requirements can impede the establishment of regulated insurance institutions dedicated to the low-income market since amassing the volume of small policies required to generate a return on such an investment could take years, if it ever occurred at all. Furthermore, imposing high capital requirements designed to 5 Leach (2005) identifies three dilemmas for financial sector regulators: 1) the trade-offs between stability and access (which only partly relates to the issue of regulating informal providers), 2) managing innovation and 3) handling international pressure to conform to standards and codes.

6 Formal microinsurance entities can be either companies (first-tier institutions) or member-based institutions under a lower tier.

An enabling regulatory environment for microinsurance 495 protect the financial system seems inappropriate for such small policies – a capital sledgehammer to crack a solvency nut. The current trend toward raising capital requirements in many countries may force existing microinsurers to close down (see Box 93). Their existing policyholders, in the absence of alternative sources of coverage, risk having no protection in the future.

Capital requirements in PeruBox 93

In Peru, the insurance law issued in 1993 did not promote insurance products for the low-income market. Higher capital requirements were introduced and caused some insurance companies to merge, while others left the market altogether. From October 1994, SEGUROSCOOP, a low- and middleincome segment insurer, had to cease operating as an insurance company.

However, it found a solution: it formed a new company called ServiPerú that offered social security services, i.e. health and funeral services. It also created a subsidiary insurance brokerage and transferred its insurance portfolio to an insurer. As an insurance broker, ServiPerú is supervised by the Banking and Insurance Superintendence. As far as the social security services are concerned, ServiPerú is under the control of the Supervisory Commission for Enterprises and Securities (not governed by the insurance law). Although not an ideal solution, the former insurer found a new way to operate (new company structure, new products, and new distribution channel), stayed in the market and continued to serve its clients.





Source: Adapted from Rodriguez and Miranda, 2004.

There are a number of other requirements in insurance laws and regulations that prevent microinsurers from getting a licence, such as the high requirements for key management. Highly-qualified insurance managers are unlikely to opt to lead a microinsurance organization, which generally offers a lower salary and fewer career options than a commercial insurer.

Obviously it is necessary to have qualified people running the company, but should the qualifications be relaxed for microinsurers?

Complex reporting requirements can make the cost of management and administration prohibitively expensive for small microinsurance operators. If reporting and disclosure requirements, originally designed for large insurance companies with complex structures, are imposed on microinsurers with simple procedures, costs will rise. Similarly, the requirement to have an actuarial review can be expensive and difficult to fulfil in some jurisdictions.

This regulatory burden, perhaps coupled with a premium tax, adds to the cost of the product and leads to a reduced level of access for the poor.

496 The role of other stakeholders These aspects need to be analysed to appreciate where entry barriers can be lowered to promote microinsurance. Certainly, supervisors appear justified in not licensing insurance entities with weak management and low capital. However, it is questionable whether organizations which are often locally-based and oriented towards the low-income market should be denied a licence on the basis of requirements that are neither relevant nor appropriate for the types of services that they offer. This is particularly true for mutuals and friendly societies, for which a long legal tradition exists of requiring no capital at all since risk is borne by the membership.7 Without a licence, the microinsurer is trapped in a vicious circle: no access to sources of additional capital or reinsurance, which ultimately means no growth for a prudent operator. If these schemes cannot grow, then it will be difficult for them to achieve economies of scale and extend coverage to the vast unserved market. In such an environment, policyholders are not protected8 and the institutional learning curve is not inspired by external control (supervision) and high standards (regulation). The only advantage that supervisors enjoy is that they do not have to deal with many small insurance schemes.

2.2 Regulatory barriers to distributing microinsurance products As mentioned in numerous chapters, one approach to expanding microinsurance services is for a regulated insurance company to offer a product line that reaches the low-income market through alternative distribution mechanisms, including community organizations, banks, retailers, cell phone companies and others. However, regulatory barriers can also inhibit the use of these distribution channels even though they might be effective in reaching lowincome markets. Supervisors need to monitor trends to ensure that regulation is not restraining the innovation by distribution channels in a way that is detrimental to market development (Leach, 2005).

Microfinance institutions (MFIs) are a key distribution channel for microinsurance because they already engage in financial transactions with the low-income market. However, in some jurisdictions, MFIs – and other institutions that work closely with the poor – cannot distribute insurance without conforming to stringent licensing requirements for agents or brokers.

For example, the requirement that an agent has to be a private person may.

7 This is the case in Belgium, France, Germany, Ireland, Japan, United Kingdom and United States (practically all states), as well as Belize, India, Mali, Martinique and South Africa among others.

8 Commercial insurance regulations often stipulate cumbersome practices that are inappropriate for low-income customers, who may be illiterate and understand little of insurance. This result is ironic since this target market requires even more consumer protection.

An enabling regulatory environment for microinsurance 497 not allow MFIs to sell insurance. The requirement for specialized staff to sell insurance undermines the efficiencies that are possible by selling insurance through loan officers and tellers. Some jurisdictions prohibit lending organizations from selling insurance altogether, citing conflict of interest.

Furthermore, the training requirements to become a licensed agent may be excessive given the simplicity of microinsurance products. Should a poor housewife who wants to sell US$500 endowment policies to her friends and neighbours have to go through 100 hours-worth of training? In some jurisdictions, the licensing requirements for agents are not strictly enforced, allowing MFIs and microinsurers to sell insurance, albeit in a potentially vulnerable legal situation (see Box 94).

Requirements for agents and brokersBox 94

In the Philippines, the Insurance Commissioner (IC) licenses agents that have fulfilled certain criteria (e.g. payment of a registration fee, passing an exam, and no criminal record). An agent has to be a private person. However, several MFIs in the Philippines collaborate with Cocolife to insure more than 300,000 poor households – although these MFIs are not registered as agents.

They sell Cocolife’s products, but do not receive a commission. Instead they load the net premium charged with an administration fee that is paid by the client to the MFI at the start of each loan (Leftley, 2005).

AIG Uganda has a partnership with 26 MFIs in three countries to cover over 1.6 million lives. In Uganda, any individual selling insurance as an employee of an MFI would technically need to be licensed, though in practice none are. As a consequence, the MFIs’ credit officers often lack the skills to sell insurance and to advise customers (McCord et al., 2005a).

In Bangladesh, insurance agents also need to be licensed. This may help to ensure a minimum level of agent quality; however, it may also make it difficult to serve the rural poor. Delta Life, for example, certifies the agents for its mainstream products that target middle- and higher-income persons in urban areas. However, it calls its microinsurance agents “organizers” to avoid licensing requirements. Another complication is that agents are eligible to continue to earn commission on renewal premiums even after they have left the insurance business, which creates additional administrative complications when dealing with hundreds of thousands of very small policies, and thousands of organizers (McCord and Churchill, 2005).

–  –  –

may create a problem for microinsurers, since low-income markets are more expensive to serve and may justify a higher cost structure.



Pages:     | 1 |   ...   | 84 | 85 || 87 | 88 |   ...   | 108 |


Similar works:

«FY 2006 Performance and Accountability Report STRATEGIC GOAL 2: Enhance the Ability of the Nation’s Health Care System to Effectively Respond to Bioterrorism and Other Public Health Challenges HHS has a number of initiatives and programs directed at protecting Americans from bioterrorist attacks and other public health challenges. The events of Hurricane Katrina, September 11, 2001 and subsequent anthrax attacks have reinforced the HHS role in protecting Americans from attacks on our health...»

«A Unique Leadership Course for Hazardous Materials Workers NIEHS Worker’s Training Exchange Workshop March 28-29, 2012 – Fort Lauderdale, Florida Robert Emery, DrPH, CHP, CIH, CSP, RBP, ARM, CPP The University of Texas Health Science Center at Houston Environmental Health & Safety 1851 Crosspoint Drive OCB 1.330 Houston, TX 77054 (713) 500-8100 Robert.J.Emery@uth.tmc.edu Texas-Utah Consortium for Hazardous Waste Worker Training • Partnership Established in 2010 between: – University of...»

«Jane Goes to Sanditon: An Eighteenth Century Lady in a Nineteenth Century Landscape ROBERT BENSON Department of Landscape Architecture, College of Architecture and planning, Ball State University, Muncie, IN 47306-0310 My beloved Laura (said few Hours before she died) take she to me a warning from my unhappy End and avoid the imprudent conduct which had occasioned it... Beware of fainting-fits... Though at the time they may be refreshing and agreable yet beleive me they will in the end,...»

«Compendium of Federal Data Sources to Support Health Workforce Analysis April 2013 Health Resources and Services Administration Bureau of Health Professions National Center for Health Workforce Analysis Compendium of Federal Data Sources to Support Health Workforce Analysis April 2013 The Health Resources and Services Administration (HRSA), U.S. Department of Health and Human Services (HHS), provides national leadership in the development, distribution, and retention of a diverse, culturally...»

«Das Schopfungs Modell Eine Alternative Zum Evolutions Modell Vergangenes ProSieben-Relevanzzielgruppe an Sonnenschirm kann mit SV auf den Betroffenen den Stadt an die Boateng Das Schöpfungs-Modell: Eine Alternative zum EvolutionsModell surfen. aber Wasser, Verfahren, Wahlen und AfD sah auf der og Platz, insgesamt den vergangenen Medizin. Auf anderen mitteilte etwa den Sendungen an, den Bezug ich noch einsetzen Bundesverwaltungsgerichts desto alles nicht. Selbst wurde die positionierten und...»

«Activin receptor-like kinase 1 is a novel regulator of collagen deposition in idiopathic pulmonary fibrosis Inaugural Dissertation submitted to the Faculty of Medicine in partial fulfillment of the requirements for the PhD Degree of the Faculties of Veterinary Medicine and Medicine of the Justus Liebig University Giessen by Chrobak, Izabela Maria of Rabka-Zdrój, Poland Giessen 2009 From the Department of Medicine Director / Chairman: Prof. Dr. Werner Seeger of Medicine of the Justus Liebig...»

«Aus dem Zentrum für Zahnmedizin Abteilung für Zahnerhaltung und Präventivzahnmedizin Medizinische Fakultät der Charité – Universitätsmedizin Berlin Dissertation Klinische Nachuntersuchung und quantitative Randanalyse von im Studentenkurs gelegten Kompositfüllungen im Frontzahngebiet. Eine 6-Jahres-Studie. zur Erlangung des akademischen Grades Doctor medicinae dentariae (Dr. med. dent.) vorgelegt der Medizinischen Fakultät Charité – Universitätsmedizin Berlin von Zahnarzt Björn...»

«The COMMONWEALTH FUND Realizing Health Reform’s Potential How Insurers Competed in the Affordable JUNE 2015 Care Act’s First Year Katherine Swartz, Mark A. Hall, and Timothy S. Jost The mission of The Abstract Prior to the Affordable Care Act (ACA), most states’ individual health Commonwealth Fund is to promote a high performance insurance markets were dominated by one or two insurance carriers that had little health care system. The Fund incentive to compete by providing efficient...»

«Environmental Health & Safety Compressed Gas Safety Program March 2015 (480) 965-1823 ASKEHS@asu.edu Department of Environmental Health & Safety, Occupational Health & Safety Introduction and Purpose Arizona State University continually strives to provide a learning, teaching, and research environment free from recognized hazards. The University requires the safe handling, use, and storage of compressed gas cylinders to protect employees and students from potential physical and health hazards...»

«Massimo Mangialavori Klassische Homöopathie Band 1 Reading excerpt Klassische Homöopathie Band 1 of Massimo Mangialavori Publisher: Faust Verlag http://www.narayana-verlag.com/b1624 In the Narayana webshop you can find all english books on homeopathy, alternative medicine and a healthy life. Copying excerpts is not permitted. Narayana Verlag GmbH, Blumenplatz 2, D-79400 Kandern, Germany Tel. +49 7626 9749 700 Email info@narayana-verlag.com http://www.narayana-verlag.com FALLANALYSE...»





 
<<  HOME   |    CONTACTS
2016 www.book.dislib.info - Free e-library - Books, dissertations, abstract

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.