Inclusive Insurance Training for Insurance Supervisors Jamaican Case Study

Structure of Case Study Context Demand & Supply Issues Regulatory Issues Next Steps Image: Strawberry Hill, St. Andrew, Jamaica

Image: Rio Grande, Portland, Jamaica Context Image: Rio Grande, Portland, Jamaica

Context Jamaica is an independent island nation with an estimated population of 2.7 million (as at December 2015). Source: Statistical Institute of Jamaica

Context The largest employers include: Wholesale & Retail Trade Agriculture, Hunting, Forestry & Fishing Hotels & Restaurants Source: Statistical Institute of Jamaica

Context Jamaica’s informal economy is significant in size and impact. Image: Craft Market

Context In 2001, an Economic and Sector study estimated that the Jamaican informal economy represented over 40% of the overall economy. Source: “The Informal Sector in Jamaica”, Inter American Development Bank

Context In the year of a natural disaster, growth in GDP tends to slow due to reduced productivity, loss or agricultural output and reduced tourism arrivals. Source: ABC News

Jamaica: Demographics & Labour Market A study of the coping strategies employed by Caribbean tourism and agriculture workers after a weather event revealed that insurance was rarely utilized. Less than 3% of Jamaican respondents relied on an insurance payout after the most recent weather event. Source: “Demand for Weather Related Insurance and Risk Management Approaches in the Caribbean”, Federal Ministry for Economic Cooperation and Development

Group Discussions What are the similarities and differences between the Jamaican context and your own jurisdictions? Do you perceive that there is a need for insurance among the low income and the underserved population in Jamaica or in your jurisdictions? Why or why not?

Image: Swallowtail Hummingbird, Jamaica’s National Bird Context A country diagnostic was conducted in Jamaica as a part of a joint project between the Inter-American Development Bank (IADB) and the Access to Insurance Initiative (A2ii). “Implementation of Regulatory and Supervisory Standards in Microinsurance Market in Latin America” Image: Swallowtail Hummingbird, Jamaica’s National Bird

Context The goal of the project is to promote availability of sustainable insurance products well suited to the needs of the low income population in the region One resulting report “Improving access to insurance for the low-income population in Jamaica” was published in August 2014 Similar work was undertaken in Columbia and Peru.

Demand & Supply Issues Jamaica’s large informal sector contributes to the size of the potential microinsurance target market. Demand survey results suggest that the microinsurance target market are vulnerable to a range of financial risks. However, insurance is not a popular form of risk mitigation. Savings, loans and help from family (local or overseas) are far more popular.

Demand & Supply Issues Jamaicans interact with financial institutions outside of that banking sector (e.g. money transfer service providers) that are prospective microinsurance distribution channels. Three insurance (3) companies already offer products that can be classified as microinsurance. These were forced into the existing regulatory framework.

Demand & Supply Issues Insurer 1 Utility payment protection plan is offered to loyal customers and will pay the customer’s utility bill for two months if (s)he becomes disabled Parametric weather-based insurance product will pay a benefit once pre-set wind speed or rainfall triggers are activated. Personal accident policy provides an accidental death benefit and medical expense reimbursement Insurer 2 Credit life insurance Life insurance Funeral indemnity Insurer 3 Health insurance plan included under the government’s social security programme

Regulatory Issues There is not an established procedure for the registration of microinsurance products The current legislation permits insurance products to be distributed only through brokers, agents and sales representatives. The current legislation does not consider mobile banking and other innovations.

Group Discussions What are some demand, supply and regulatory issues that may restrict access to insurance in Jamaica? Are there similarities and differences with your own jurisdictions?

Next Steps Recommendation: Dedicated regulatory regime for responsible inclusive insurance Recommendation Action Adopt a regulatory definition of microinsurance In discussion. Remove access barriers for risk carriers and distribution channels Speed up and simplify processes

Next Steps Recommendation: Improve the supply of products Action Improve the capacity of providers Invite industry stakeholders to multiple inclusive insurance events hosted by the FSC. Encourage insurers to offer products with value to consumers

Next Steps Recommendation: Improve the demand for products Action Collaborate on national financial inclusion strategy Continue FSC’s financial education programme. Participate in national financial inclusion strategy. In particular, promote financial education Interact with target market through inclusive insurance events hosted by the FSC and media broadcasts.

Next Steps Recommendation: Capacity building for FSC Recommendation Action Lead a cohesive industry effort Lead Inclusive Insurance Committee Form an FSC internal committee as a learning platform Cross-divisional internal committee collaborates on inclusive insurance matters Foster peer exchange CAIR, ASSAL, IAIS Participate in international and regional training A2ii

Next Steps Recommendation: Capacity building for FSC IAIS Financial Inclusion Working Group – Drafting Group on Index Based Insurance IAIS Financial Inclusion Working Group – Drafting Group on Digital Technology

Next Steps Recommendation: Capacity building for FSC Access to Insurance Initiative International Labour Organization

Next Steps Recommendation: Capacity building for FSC Micro Insurance Centre Toronto Centre

Next Steps After the publication of the diagnostic report, the FSC devoted resources to: Capacity Building Developing a Policy Framework document Creating an Inclusive Insurance Committee Hosting Inclusive Insurance Events Partnering with Micro Insurance Centre to draft a proposal for microinsurance regulations

Next Steps/Challenges Rapidly evolving technology continues to impact the insurance market. (E.g. mobile insurance) Innovative products are being introduced (E.g. indexed insurance)

Next Steps/Challenges The new legislation must fit appropriately into the existing framework. (E.g. Regulatory arbitrage) Consumer protection remains a key responsibility. (E.g. Market conduct initiatives)

Next Steps/Challenges Continued capacity building Continued collaboration with local, regional and international partners Phased reform

Group Discussions What opportunities/challenges do you foresee within your own jurisdictions?

Conclusion Thank you. https://a2ii.org/sites/default/files/reports/jamaica-country-diagnostic.pdf

The Jamaican diagnostic report can be found at https://a2ii