Wednesday, October 14, 2015
The Financial Inclusion 2020 Progress Report, a global multi-stakeholder movement instigated by the Centre for Financial Inclusion to achieve financial inclusion using the year 2020 as a focal point for action, has rated the progress of client protection in financial inclusion a 5/10, commending the leadership shown by regulators whilst reprehending the lack of responsibility and proactivity demonstrated by providers of financial services.
Drawing on the discussion paper on consumer protection published by the Microinsurance Network and GIZ, the report highlights how the burgeoning microinsurance sector has shown leadership on consumer protection issues by recognising the inextricable link between consumer protection and market conduct, especially in balancing “the complexity and cost of consumer protection, on the one hand, and the small size and often low margins of microinsurance products on the other”. The report emphasises how lack of familiarity with new products in this ever-innovating sector, combined with new client segments and the involvement of an array of distributors can stretch regulatory and supervisory capacity.
Consumer education is particularly relevant here, given that effective market education has the dual effect of both protecting clients through ensuring they know what they are buying and gain value from insurance products, whilst boosting the market by ensuring satisfied clients demonstrate to their peers the positive effect insurance can have when claims are made.
Regulators, supervisors and industry players will come together to discuss current practices and new ways to move forward with consumer education at the 5th Consultative Forum, 3rd November 2015, in Casablanca, Morocco. Attendees to the 11th International Microinsurance Conference can register for the Forum here.