Regulatory challenges and perspectives for positive growth AIO Life Seminar Togo, 26 November 2015

Why is regulation important? Agenda What is the current level of observance of the IAIS Insurance Core Principles (ICPs) in Sub-Saharan Africa? Why is regulation important? Why is a proportionate approach to regulation needed? What key lessons are emerging from the development of inclusive insurance regulation? What new regulatory challenges are being seen? .

Observance of the IAIS’s Insurance Core Principles in Sub-Saharan Africa A2ii analytical review of ICP observance: preliminary results Average overall ICP Observance was 5.6, which is less than Largely Observed 73% of all ICPs (19 of 26) assessed less than Largely Observed There are significant differences in overall level of observance of the ICPs from 2.1 (less than Partly Observed) to 8.7 (Largely Observed) Considerable work is needed to strengthen insurance supervision and regulation in Sub-Saharan Africa

Why is regulation important? Effective regulation is essential to build market confidence The International Association of Insurance Supervisors (IAIS) ICPs represent globally agreed international benchmark for insurance supervision Important that the ICPs are implemented in accordance with the nature, scale and complexity of individual insurers – i.e. proportionality!

Why is a proportionate approach needed to regulation? Benefits expected: More insurers incentivised to offer products to low-income clients by allowing wider distribution options and lighter compliance requirements Low-income clients protected and motivated by provision of simple products, clarity and adapted processes Policy /strategic objective: Ensuring broad-based access to (inclusive) insurance …provided by the private sector …while protecting the insured.

The state of inclusive insurance regulation 2005 2012

Adopting the regulatory framework alone is not sufficient Some Emerging Lessons Adopting the regulatory framework alone is not sufficient Financial education Industry training Supervisor training and supervisory systems Data should be collected for performance monitoring Obligations and incentives need to be balanced Fast-developing markets: test and lean approach Inclusive insurance framework should be integrated with other regulations

Supervisory challenges: a global perspective Non-traditional mass distribution channels Shifting power dynamics - away from licensed insurer Need to cooperate and coordinate with non-insurance regulator Speed of growth through mass distribution challenges low-risk assumption Consumer protection requirements for new policyholders (esp. for low-income population) Product innovations - new and more complex insurance products And… application of proportionality in practice non-traditional mass distribution channels => new entities in the value chain Question of licensing /formalising distributors Assumption that insurer is the strongest party in the value chain is no longer guaranteed (e.g. large MNOs) CP challenges: at the same time distributors are often outside insurance regulators‘ authority => Need to cooperate and coordinate with non-insurance regulators

Thanks for your attention! www.a2ii.org Thanks for your attention! . 9

What are your regional perspectives on these global challenges?