The Federación de Aseguradores Colombianos (Federation of Colombian Insurers) represents all the insurance companies that operate in Colombia and has been a member of the Microinsurance Network (MiN) since 2009. Fasecolda’s Financial Inclusion and Sustainability Director Alejandra Diaz spoke to the MiN about trust, financial inclusion and why it’s important to avoid reinventing the wheel.
MiN: Why did Fasecolda join the MiN?
Alejandra: We want to learn from other inclusive insurance experiences around the world, stay updated on trends and challenges and actively participate in developing products for those who have not been served by the insurance industry. The MiN brings together leaders, practitioners, academics and experts with the same ideal - inclusive insurance is for everyone, it helps support development and can be profitable at the same time.
Since we joined the Network has become more active in the regions, through events, webinars and other activities. One of the MiN’s greatest opportunities is to increase its presence in the regions, actively participating in calls to action in the market, collecting and disseminating regional experiences, connecting those offering training with those who need it, and accompanying the insurance associations in their discussions with local authorities.
The MiN’s best asset is its people – both Executive Team and members – who are motivated to bring insurance to those that need it most, in a profitable and responsible way in order to create a social net and help overcome challenges of the developing world. With a desire to learn, conviction and passion, even the most challenging projects can be achieved.
MiN: What is Fasecolda’s main focus?
Alejandra: We work continuously with the government towards an appropriate regulatory environment for the development of the inclusive insurance market, as well as capacity building through training, seminars and other opportunities for exchanging experiences and learning lessons from other regions. We produce data and undertake surveys to understand the current offer of inclusive insurance and to understand the potential demand, and we work hard to promote consumer protection and generate trust in the industry. Distrust is the greatest barrier to financial inclusion in insurance and, therefore, our greatest challenge.
MiN: What is Fasecolda doing to promote inclusive insurance?
Alejandra: Since 2008, Fasecolda’s Financial Inclusion Committee has promoted the development of the inclusive insurance market through regulation, innovation, distribution channels, international experiences and other matters of interest to our affiliated companies. In 2016 we signed an agreement with Banca de las Oportunidades, the government entity in charge of the national policy to promote access to financial services for the entire population. This agreement seeks to strengthen the inclusive insurance market by 2019 and includes training for companies, developing information systems, consumer protection and support for innovation.
Fasecolda also leads the inclusive insurance working group of FIDES and has helped the MiN to develop activities that add value for members in Latin America, such as seminars, translating documents and promoting events.
MiN: What were the main takeaways from April’s seminar on inclusive insurance held in Colombia?
Alejandra: The seminar aimed to reflect on ten years of inclusive insurance since the International Microinsurance Conference was held in Colombia, to recognise what has been achieved in the country and the region, and what challenges remain. There has been important progress, especially in regulation, technology and the customer-centric approach.
MiN: What is the current state of the microinsurance market in Latin America?
Alejandra: The biggest challenge the industry faces is generating trust. Multiple studies commissioned by Fasecolda show that, contrary to industry thinking, people have a high perception of their risks and they value insurance positively as a risk management tool. However, that does not translate into insurance uptake, because consumers’ perception of insurers is poor. In one survey, only 16% of 6,200 interviewees trusted insurance companies, while 85% thought contracts were too complicated to understand and 82% believed claims were not paid - even though only one in ten people had ever made a claim. This mistrust is the biggest limitation to the development of the market.
MiN: Microinsurance or inclusive insurance?
Alejandra: Inclusive insurance is a financial inclusion tool for all. Microinsurance is a great way to reach the poorest of the poor, but inclusive insurance aims to reach everyone - poor, middle class, rural populations and even relatively well-off consumers who are put off by price, product, channel, language or trust barriers.
MiN: As an outgoing Board member, what insights would you like to share with fellow MiN members?
Alejandra: Have the generosity to share, be open to listen and avoid re-inventing the wheel - someone else may have relevant experiences and know-how that we can learn from – within this community of experts that is the Network.
The Board is a group of wonderful professionals and human beings who in recent years have really dedicated precious time to give direction and strategic guidance to the Executive Team, to plan for the present and future, and help address some bottlenecks.
MiN: And looking to the future?
Alejandra: I believe the Network can step up capacity building on the supply side through training, research and advisory services in inclusive insurance with the supply side, while continuing to influence the dialogue with regulators and others who are shaping the development agenda for the coming years.
I will continue to work for the regionalisation of the Network - the MiN can definitely improve its presence in the regions, by producing content, collecting lessons, disseminating information and organising events. Fasecolda, as a member of the MiN and as head of the Inclusive Insurance Working Group of FIDES, would be willing to be a partner in this regional coordination and work side-by-side with a potential regional coordinator to take projects forward.
Within five years the MiN should have a permanent presence in the regions, with a coordinator in Asia, Africa and Latin America. Furthermore, MiN should create a platform for suppliers and service providers to connect and offer services which generate income to help inclusive insurance become more sustainable and less donor-dependent.