Insurance Development in Emerging Markets: The Role of Public Policy and Regulation

Insurance Development in Emerging Markets: The Role of Public Policy and Regulation
Paper Launch and Panel Discussion Summary

The first part of the webinar session was a launch of the joint Geneva Association and Insurance Development Forum (iDF) paper titled "Insurance development in Emerging Markets: The role of public policy and regulation" introduced by Dennis Noordhoek (Director of Public Policy & Regulation at the Geneva Association).

On the objectives of the paper
Mr. Dennis Noordhoek began by noting that over the past ten years, the economies of many emerging markets have grown significantly, and during those periods insurance market in these countries has also experienced growth. Despite this growth, insurance penetration in emerging markets, according to a global study, has only reached about 35% of the level recorded in mature markets. According to the study, the weighted average insurance penetration across the 14 markets (Argentina, Brazil, Chile, Colombia, India, Indonesia, Mexico, Morocco, Nigeria, Peru, Philippines, South Africa, Thailand, and Vietnam) surveyed in the paper increased from 1.9% in 2005 to 3.3% in 2020. Compared to the average insurance penetration across OECD markets, which grew from 8.6% in 2005 to 9.4% in 2020. Although the gap between insurance penetration in these markets and the average OECD countries narrow slightly, the gap remains significant. To further understand the drivers of under-insurance in emerging markets, it's important to understand the interaction between public policy, insurance regulation, and market development.

Main Findings of the paper
Emerging Markets: Key driving factors for insurance market development and close protection gaps:

• Political prioritization of insurance.
• Effective and efficient insurance regulation and supervision.
• Affordability, financial literacy, and risk awareness.
• Trust in insurance solutions.
• Government laws and policies have a profound impact on access to appropriate and affordable insurance: Market access and Mandatory insurance.
• Regulatory Mandate: Market development mandates are only present in a few markets.
• Insurance regulation can make a difference in supporting market development: Rate and form regulation  and Microinsurance regulation.

Recommendations for Policymakers

• Enhance collaboration with the insurance regulators and the insurance sector.
• Provide regulatory authorities with a clear mandate (including market development), appropriate resources, funding, training, and technical support.
• Dismantle overly burdensome market access barriers to insurers and reinsurers in order to reap the full benefits of competition, innovation, and global risk diversification.
• Make improving financial literacy a policy priority, for example, by integrating financial education in core school curriculum.

Recommendations for Regulators

• Active role in educating policymakers on the value of insurance.
• Relax or abolish rate and form regulation.
• Enable digital and alternative forms of distribution.
• Accommodate innovative parametric insurance solutions.
• Support financial literacy and risk awareness initiatives.

Recommendations for Insurers

• Take responsibility in educating policymakers and other government officials on the role of insurance in societies.
• Engage with regulators in an open, constructive manner to discuss market issues and possible solutions.
• Proactivity in raising risk awareness and financial literacy.
• Focus on the insurance needs of specific customer segments and deliver simple and cost-effective products that are needed.

Panel Discussion

Dennis Noordhoek moderated the discussion with four panelists; Hannah Grant (Head of the Secretariat at Access to Insurance Initiative), Bill Marcoux (Operating Committee Member, Chair of LRRP Working Group Insurance Development Forum), Corneille Karekezi (Group Managing Director & CEO Africa Re) and Sang Lee (CEO Manulife, Vietnam). Dennis began the panel session by explaining that an important key message of the paper is centered around the benefits of insurance regulators having an insurance market development mandate. As the paper has shown, some mandates existed amongst the 14 countries surveyed; however, the interpretation of a mandate varied differently in different markets. Posing the first question to the panelist, Dennis asked, "How do you see insurance development mandates, and is there a trend toward more authorities getting these mandates in addition to their existing mandates?"

Hannah Grant (Head of the Secretariat at Access to Insurance Initiative) noted that consumer protection and financial stability have always been insurance supervisors' primary priorities; however, a trend is emerging in emerging markets and developing economies where supervisors are taking on market development mandates. She cited a study published by the International Association of Insurance Supervisors (IAIS); a survey indicated that almost 90% of the emerging markets in developing countries have financial inclusion mandates, which contrasts with the situation 10 years ago when few supervisory authorities had such a mandate. Hannah explained that while supervisors in the emerging markets have this mandate, it does not always mean they have the capacity or the resources to pursue market development initiatives or tools to impact this area.

Dennis cited that market development has many different interpretations and, in some countries, has been perceived as developing products for the poor. He asked the panel, "What does the market development mandate entail in your view?"

Bill Marcoux (Operating Committee Member, Chair of LRRP Working Group Insurance Development Forum) responded that the answer centers on how we define success, what market development means for insurance regulators, and what it would look like if market development is effective. According to him, critical components would include a financially secure market with few insolvencies and appropriate market conduct with insurers committed to treating their markets fairly. However, with issues surrounding the existence of mandates, he suggested the need to broaden the scope by asking the question, are more people protected in the risk they face? Are they smarter insurance buyers? Is there sufficient capacity in expertise in our market to deliver the products in the risk capacity that the market needs? Focusing on these areas and assessing the impact of the existing mandate would provide better guidance to determine success.

Posing the next question to Corneille Karekezi (Group Managing Director & CEO Africa Re) and Sang Lee (CEO Manulife, Vietnam), Dennis asked, "In heading insurance companies in Africa and Asia, what is your take on the way regulators and supervisors are taking onboard the insurance market development mandate, do you see wealthy varying ways of doing this, and are there success stories and things that can be done better?"

[Africa Perspective]Corneille Karekezi noted that Africa had seen different initiatives in this area. Yet, insurance market development in some African jurisdictions is not clearly stated with a defined objective for insurance regulators. Rather than focus only on penetration rate and the number of premiums, the statistic should also include the number of people covered individually, capturing the size of the business, particularly the informal industry and networks, and how they are taking up formal insurance. Corneille noted the importance of close connections and collaboration between regulators, supervisors, and key industry players, the political will to support the implementation of existing policies, and closer engagement with insurers.

[Asia Perspective]Sang Lee remarked that Vietnam and emerging markets in Asia are increasingly growing with great opportunities for local and foreign insurers. Specific to Vietnam, the market has been spurred forward by government support. Some positive achievements included a government sponsorship aimed at restructuring Vietnam's stock market and the insurance market to support the development of the various regulatory policymakers and ensure that Vietnam experiences an increase in the ownership of life insurance. Another positive development is the launch of a new Insurance business law month on June 16th, 2022, to support market development and provide guidance to insurance companies on how to adapt to regulations.

Dennis's next question for all the panelists was about policymakers' lack of prioritization of insurance. He asked, "Reflecting on your experience of the African continent, what is the biggest challenge in actually getting insurance into the minds of policymakers or governments more generally?" 

Corneille responded first and stated that Insurers are yet to find a strategic way to best represent the benefits of their services in boosting growth in different sectors of the economy. He suggested that Insurers need to make a case for the value of insurance in their respective economies. Sang Lee noted that Insurers need to work on simplifying their products, making the products accessible online, and making the case to regulators on the needs of the public. Hannah suggested collaborative work by key stakeholders committed to achieving the sustainable development goal. Hence to best gain the attention of policymakers, it would be best to phrase discussions on how insurance helps meet sustainable development goals. Data and evidence are critical here to show governments the impact, including developing key performance indicators. Bill added that there is a lack of evidence on the industry's influence and that it needs to be created to support proposed propositions for competitive open markets to government regulators.

In the Q&A session from the audience, the question asked was on How to encourage  current mainstream advocacy for inclusivity when insurers are yet to support the traditional sector

Hannah responded by noting that while this is an area with increased awareness and encourages emerging markets, consideration should be given to allowing informal institutions like community-based organizations to become insurers. Increased requirements for vulnerable consumers e,g, shorter claims periods, capacity building of regulators to help improve skills in this area, education on appropriate regulations, improving conditions for the general insurance sector, funding, and rethinking distribution in emerging markets. Panelists concluded by sharing their last remarks on the next steps for the industry. Reiterating the need for increased innovation and continuous dialogues to address consumers' market needs, transparency and accessibility of data beneficial to pricing products, political will for transformative initiatives, and collaboration among stakeholders to bridge the protection gap.

For more information about the findings of this study please go to or

To watch the full conversation click here

To access to the full report click here