Talleres y seminarios

Workshop Report: Final Workshops to Present Findings of Colombia Microinsurance Country Diagnostic

On August 4th and 5th, the Access to Insurance Initiative (A2ii), the Multilateral Investment Fund (MIF), member of the Inter-American Development Bank (IADB) Group, and the Superintendencia Financiera de Colombia carried out two final workshops to present the findings and recommendations of the Colombia microinsurance country diagnostic. The country diagnostic was part of the activities of the joint IADB/A2ii Project “Implementation of Regulatory and Supervisory Standards for Microinsurance markets in LAC” that aims to increase the availability of sustainable (micro) insurance products tailored to the needs of the low-income population in Latin America and the Caribbean.

The Superintendencia Financiera de Colombia (SFC) hosted the workshops in their headquarters in Bogotá. The first workshop on August 4th, counted with the participation of officials from the Insurance, Risks, Research and Development areas from SFC as well as officials from the Ministry of Finance (MF). The second workshop on August 5th was directed to stakeholders from the Colombian insurance market and counted with the presence of 101 representatives from insurance companies, NGOs, brokers associations, as well as different Ministries and other government institutions.  Both workshops counted with similar sessions which content is summarized below.
 
Mr. Gerardo Hernández, Superintendent from SFC, and Ms. Marike Brady, A2ii Executive director, opened the stakeholders workshop. Mr. Hernández welcomed to the participants and made a summary of measures that Colombian government have carried out on the last years to extend financial inclusion in the country. He also mentioned the importance of this project for SFC to continue with the work started by the Colombian insurance industry on microinsurance and as part of the permanent dialogue with the industry on the common goal to extend access to insurance in the country. Following, Ms. Marike Brady, remembered the evolution of concepts related to microinsurance until currently talk about a broader concept of access to insurance or responsible insurance, as well as, how policy and regulatory approaches had evolved in the last decade, to see in the recent years that each country develops its own a tailor-made approach and a unique solution to market development. She also highlighted the Colombian market characteristics which can configure a potential success on this objective, as it counts with: a supportive national policy framework on financial inclusion, an active market interested in serving new client segment, and a supervisor that has taken a leading role in creating an enabling environment for the market. Finally she emphasized that diagnostic process provides an opportunity for stakeholders to come together and build consensus on the basis of our findings and invite to participants to work on that sense.

Afterwards, Ms. Andrea Camargo, lead consultant and Ms. Clémence Tatin-Jaleran, senior consultant of the country diagnostic team, presented the main findings arising from the microinsurance country diagnostic. As an introduction to the discussion, the team presented what is considered microinsurance according the IAIS and FASECOLDA –Colombian association of insurance companies- and what is the difference between microinsurance and massive products, considering that if massive products are commonly accessible and affordable, microinsurance needs also to be tailor-made to the client needs. Talking about the findings, they highlighted a potential microinsurance market of 32.5 million of people and 5 million more in the future, from population who is moving from lower income segments due to the economic growth experienced in the country. They mentioned that even if statistics form Fasecolda are not consistent on criteria to define microinsurance and there are companies who don´t report to FASECOLDA, the analysis of market have been done with FASECOLDA data, as the only one available for this market.

They mentioned, that despite the sustainable growth of insurance penetration on the last years, they identified the Colombian market as a growing market, since it has a restricted variety of products, where life products counting for more than 95% of total.  They also highlighted the low claim ratio in all kind of products, with a 23.3% average claim ration and dissimilar renewal rates. They also highlighted the high operative costs reported by the industry and limited channels of distribution used currently, despite alternatives that regulation offer. They commented that most of microinsurance policies are complicate. On the demand side they mentioned, there is still room for diversification, as the target market mentioned in different studies they would like that other risks to be considered on coverage as robberies and unemployment, to count with insurance which extend coverage to their families and insurance with simple policies.  They mentioned the efforts made by the Colombian government to promote financial inclusion and some conditions established by law with that goal. However there are still some barriers that are limiting the offer as the massive commercialization is limited to banking offices, banking correspondents can´t sell insurance products, or other as the need clients fulfil AML/KYC rules when compensations are paid, as well as, legal gaps about responsibilities in front of individual clients in case group policies.

In a subsequent session, the country team opened the discussion to the participants, asking if they think they shall maintain the status quo in the industry or they think their institutions could do more to improve access and responsible insurance.  Some participants expressed that there is a need of mindset change among all institutions on the insurance chain to know and attend the low income segments. They also mentioned some government institution working on those segments have done request for proposal to insurance companies, for specific products for those segments and haven´t found interested companies. SFC representatives mentioned that they recognized the effort made by the industry to promote access to insurance, but also they believe there is need to do some adjustments to regulation to reduce barriers and reinforce value delivered to the clients through insurance coverage. Finally, some representatives agreed with the findings presented and expressed the need to work jointly.

Taking account all expressed in this session, Ms. Andrea Camargo, lead consultant and Ms. Clémence Tatin-Jaleran, senior consultant of the country diagnostic team, continued with the workshop presenting the country diagnostic recommendations, which confirmed ideas expressed by the audience. They summarized recommendation on 5 core ideas for all participants in the insurance value chain. The first core idea was referred to develop proportional regulation to remove the legal barriers to reduce costs of commercialization; to protect the consumers, through simplified policies and procedures and to better track the development of the microinsurance and massive insurance market.  The second core idea was in relation to promote a supply of valuable products for the consumer, through the proposal of adoption of good practices by all participants of the insurance value channel, designing tailor-made products, using available transaction platforms and commercialization channels,  developing lessons from past private-public partnerships, among others. The third core idea was focused on promote the adoption and use of insurance for the target population, especially through the proposal of extension of financial education programs and the inclusion of insurance on national strategies against natural risks.  

The fourth core idea was to increase the SFC capacities to implement proportional supervision to insurance companies attending microinsurance market, to reinforce its capacities to apply a supervision based on technical and social indicators and to promote its coordination role with other supervisory institutions related with this market.  And finally the fifth core idea was focused on consumer protection issues, through a self-regulation proposal to the industry, in order it established a conduct code for microinsurance, while in the other hand propose to consumer associations to work on specific measures for products directed to low income segments.   And finally the team emphasized the need of a permanent dialogue among all participants of insurance value chain to assure the transition to a more diversified and responsible insurance market