Regulatory Approaches to Inclusive Insurance Market Development

This paper provides guidelines to determine the optimal regulatory approach to be followed by a particular country to promote increased access to insurance product markets. The study is based on 25 countries, of which eight have already adopted microinsurance specific regulations, while some of the others have proposed regulations of some form. On the basis of experience scrutinizing countries as part of a synthesis process, the paper identifies five observed regulatory approaches to promote access to insurance across jurisdictions and across market products. It discusses the following in detail:

• Definition of a regulatory approach: the policy objectives, conditioning factors, and tools to implement a regulatory approach (fiscal, regulatory, surveillance, and enforcement);
• Discussion on five distinctive regulatory approaches: public provision approach, directive approach, concessionary regime, nudge approach, and long-term market development approach. These five are in the order of being increasingly market based and decreasing level of state intervention;
• Reasons leading to the adoption of specific regulatory approaches: context factors (macroeconomic conditions and physical infrastructure), latent demand, supply (level of market development and informality), public sector and regulatory framework (availability of public funding, public infrastructure, supervisory capacity, compliance burden, and the interplay between the conditioning factors).