At the fourth Responsible Finance Forum, representatives of supervisory authorities, industry representatives and development organisations discussed consumer protection in emerging insurance markets.
Adequate consumer protection solutions can help consumers to use microinsurance effectively, ensuring greater trust in micro-insurance and as a result encouraging further market development. Her Majesty Queen Máxima of the Netherlands, UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), underlined in her written welcome note to the conference that it is essential to guarantee the provision of “products that are responsible, that build consumer confidence and trust, and reach scale and sustainability”.
Participants recognised that the main challenge in consumer protection in micro-insurance is to strike the right balance between effectively protecting the consumer and increasing access to micro-insurance by promoting the development of the micro-insurance market. In doing so, the three pillars of responsible finance were confirmed to increase both protection and access for low-income households:
In respect of the first pillar of responsible finance, consumer protection through regulation, the International Association of Insurance Supervisors (IAIS) is playing an essential role in setting standards and building regulatory and supervisory capacity. The Access to Insurance Initiative (A2ii) is supporting these efforts. Regulatory approaches can protect consumers in a variety of different ways, for instance, through formalisation of insurance, product regulation and strong engagement in financial education efforts.
In respect of the second pillar, industry, the forum discussed the varied experiences and approaches of industry players as well as interesting initiatives in self-regulation. Participants emphasised the industry’s own interest in offering valuable insurance products. Regulation should be supportive to innovations of insurers. Strengthening of distribution channels is central to the consumer protection agenda.
In respect of the third pillar, consumer capability, the forum paid special attention to the importance of the need to empower consumers and give them the tools needed to play an active role in protecting themselves and using insurance effectively. Also, the importance of measuring financial education efforts was stressed.
The developments to date show the engagement of many micro-insurance stakeholders, but much work lies ahead in order to provide quality insurance to the poor, in a responsible and sustainable manner. Efforts to stimulate micro-insurance market scale and increase access to insurance must be balanced against consumer protection needs, but in the long term there are synergies between the two. As effective consumer protection promotes stability, value, and trust in micro-insurance, scale and access goals will also benefit. The forum concluded that it is crucial for stakeholders to develop cohesion in the consumer protection strategies of different players, after carefully analysing both the needs and the different benefits they may all bring to these areas.
The topic of responsible finance has become a priority of the G20 and of Financial Sector Development worldwide and the Responsible Finance Forum is an important milestone in sharing knowledge and best practice in responsible finance globally. The Responsible Finance Forum is a platform for knowledge exchange and consensus-building around the topic of responsible finance.
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