Deputy Executive Officer: Insurance Financial Services Board Accelerating financial inclusion through regulation – a case for harmonization of Insurance Regulation Jonathan Dixon Deputy Executive Officer: Insurance Financial Services Board South Africa 23 May 2017

Inclusive insurance “matters”… What is our shared goal? Inclusive insurance “matters”… Insurance protects poor households and microenterprises from falling back into cycle of poverty -------------------------- ----------- Insurance mobilizes long-term domestic savings for finance of infrastructure and housing and contributes to capital market development Insurance sustains the efforts of other policy agendas such as food security, agricultural protection or private sector development ---------- Insurance market development is important for broader socioeconomic development

Effective regulation and supervision matters… What can supervisors do? Effective regulation and supervision matters… Builds confidence Information asymmetry Requires confidence Insurance is characterised by a high level of asymmetry of information between providers and consumers and requires payment for the service long before the customer has an opportunity to experience its value As a result, this “business of promises” requires a high level of consumer confidence and trust in the industry if markets are to develop and grow Effective regulation and supervision are essential to build consumer confidence and trust and help ensure financial stability

What is “effective” regulation and supervision? What can supervisors do? “Proportionate” to the nature, scale and complexity of insurance business being conducted – enables market development while protecting more vulnerable consumers What is “effective” regulation and supervision? Developed in close consultation with industry with adaptations made as more knowledge and experience gained Forward-looking so as to allow for future innovations – particularly as new players become involved and more innovative products and distribution channels are developed Supervisors in Africa are making big efforts to implement proportionate regulation – not easy!

A case for harmonization? Establish common expectations of how insurers should be run and customers should be treated Potential benefits Leverage combined expertise between jurisdictions Manage the risk of regulatory arbitrage and support industry growth on a cross-border basis Enables more effective supervisory capacity building and technical assistance Facilitate supervision through the collection of consistent data, benchmarks, international comparisons and identification of best practices over time

What guidance? International Association of Insurance Supervisors (IAIS) Harmonised approach Application paper ICPs IAIS/A2ii papers Supports globally a more ‘harmonised approach’ based on international best practices Application Paper on Regulation and Supervision supporting Inclusive Insurance Markets (2012) IAIS Insurance Core Principles (ICPs) deal with all key elements of regulation & supervision Additional guidance available from IAIS and A2ii

Regional engagement and coordination What guidance? Regional engagement IAIS/A2ii Regional engagement and coordination Maximise coordination with regional forums; Develop sub-regional implementation plans; Enhance supervisory cooperation and information exchange Implementation Work towards full ICP observance and regional engagement; Action planning around regional needs Strengthen capacity Organise capacity building through A2ii and other partners IAIS Sub-Sahara Africa members expressed strong support for the development of a regional implementation approach that enhances regional harmonization of supervisory practices and facilitates financial inclusion - building on existing work being undertaken in the region In line with the IAIS’ Coordinated Implementation Framework and as the key implementing partner to the IAIS, A2ii wants To support the implementation of sound regulatory and supervisory frameworks consistent with international insurance standards in the region to strengthen the capacity and understanding of insurance supervisors in SSA to facilitate their role in expanding access to, and usage of, insurance for the low-income and other excluded populations. IAIS regional members agreed to use the current momentum to consider a process around a regional implementation approach of IAIS standards for the region, facilitated by IAIS and A2ii, focused on specific supervisory priorities – identified by a bottom-up approach Supporting harmonization at a regional level

CISNA Microinsurance Forum Example CISNA Microinsurance Forum Promote the harmonisation of microinsurance regulations in the SADC region and to build capacity to implement those regulations Develop clear policies and procedures for effective supervision to support the expansion of inclusive insurance Coordinate efforts to grow more inclusive insurance markets Support members to facilitate the development of insurance markets Guidance note: guidance for a harmonised regulatory framework in SADC for inclusive insurance, based on IAIS Application Paper Common template: data collection for inclusive insurance business in SADC and common ratios for analysing performance

Thanks for your attention! Contact… Thanks for your attention! Please get in touch! A2ii contacts SSA regional coordinator: Janice Angove: janice.angove@a2ii.org Head of Secretariat: Hannah Grant: hannah.grant@a2ii.org www.a2ii.org; secretariat@a2ii.org IAIS contact IAIS Secretariat: Conor Donaldson: conor.donaldson@bis.org