Informal insurance: a regulator’s perspective


Access to insurance may be an important strategy for reducing poverty. Financial markets, and particularly insurance services, can help poor people manage critical risks such as a death in the family, illness or loss of income or property. Despite the growing importance and expansion of microinsurance services geared to low-income people, microinsurance penetration remains limited, leaving the vast majority of poor people without adequate protection. Evidence from a range of countries shows that much of microinsurance is provided in an informal and unregulated way. Informal markets can play an important role in servicing people ignored by the formal sector, but they also pose risks for consumers and can undermine the development of formal markets if they are not managed in the right way. How can regulators with limited capacity deal with informal markets in a manner that ensures consumers are protected and market development is facilitated? This focus note will explore these questions by considering the experience of five countries. It draws on the findings of a study by the IAIS/MIN Joint Working Group on Microinsurance1 on the development of microinsurance markets in Colombia, India, the Philippines, South Africa and Uganda.






Doubell Chamberlain, Hennie Bester, Christine Hougaard

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Cenfri, Microinsurance Network

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