30 October, 2024
Nicolás Morales, Regional Manager for Latin America and the Caribbean at Microinsurance Network
On 9 October 2024, a key event for financial inclusion in Ecuador took place in Quito: the launch of the new microinsurance regulation, organised by the Financial Policy and Regulation Board (JPRF) in collaboration with the United Nations Development Programme. In addition to introducing the regulation, this event highlighted the importance of microinsurance as an essential tool for the financial protection of the most vulnerable populations and for promoting sustainability in the insurance sector.
The event began with a welcome from María Paulina Vela, president of the JPRF, who emphasised how this regulation aligns with the Ecuadorian government’s efforts to foster financial inclusion. Catalina Pazos, a member of the JPRF, provided a broad perspective on the role of microinsurance within the National Financial Inclusion Policy. She highlighted how this new regulation promotes accessible and simplified financial products that meet the unmet needs of Ecuador’s low-income population.
Following this, Iván Velástegui, also a member of the JPRF, presented the key details of the microinsurance regulation, emphasising some of its most relevant components. This regulation introduces principles such as simplicity, accessibility, and transparency in microinsurance products, making it easier for low-income individuals to access basic insurance that covers adverse events. Additionally, he explained how the regulation encourages innovation and protects consumers by mandating clear and accurate information on microinsurance products, ensuring that policies are understandable for all users.
Nicolás Morales, Regional Manager for Latin America and the Caribbean at Microinsurance Network, then emphasised the enormous potential that microinsurance represents in the region, pointing out that only 12% of the potential market is currently being reached. His message was clear: "We don't want the industry to keep competing for traditional customers. It’s not about redistributing the pie but about how we make it bigger." He also stressed that proper interaction between insurers, distribution channels, and public-private partnerships is vital to ensure the sustainability and success of these products.
Mabyr Valderrama, Director of Sustainability at FASECOLDA, shared Colombia's experience in implementing inclusive insurance. She explained that inclusion in insurance is an integral part of the social component of sustainability and aligns with ESG (environmental, social, and governance) criteria. Valderrama highlighted that in Colombia, public-private partnerships have been essential drivers for advancing financial inclusion. As an example of these partnerships, she mentioned three innovation challenges in Colombia: one focused on tourism, another on nature insurance, and the most recent on protection for small shopkeepers, demonstrating how innovation can create relevant products for different sectors. Additionally, she emphasised that these products contribute to economic resilience in the most vulnerable communities.
The event also included presentations on the growth potential of microinsurance in Ecuador. Patricio Salas, Executive Secretary of FEDESEG, encouraged insurers and distribution channels to collaborate in expanding insurance coverage by taking advantage of the opportunities offered by this new regulation.
The event concluded with the launch of the "Microinsurance Innovation Challenge," an initiative led by the UNDP and presented by Jorge Luis Morillo, National Coordinator of the Insurance and Risk Finance Facility (IRFF). This challenge aims to incentivise actors in the insurance sector to develop innovative solutions that meet the specific needs of the Ecuadorian population, promoting new products and services that are both affordable and socially impactful.
This event marked a crucial step in the consolidation of microinsurance in Ecuador, offering a regulatory framework that will enable the development of inclusive products and foster collaboration between insurers, regulators, and international organisations. Thanks to the new regulation and the impetus from the innovation challenge, the Ecuadorian insurance sector is now better positioned to close the protection gap and generate a significant impact on the lives of millions of people in the country.