Kathmandu. Insurance awareness is especially important for inclusive insurance consumers. An inclusive insurance market is essential for consumers who are particularly vulnerable and at risk of facing financial shocks at any time. Apart from this, they are also more vulnerable to mis-selling or abuse by insurers and intermediaries.
Here is a brief description of the recommendations made by the insurance regulator in the report on the regulatory role for inclusive insurance, ‘The Supervisory Role in Building Insurance Awareness’ published by Access to Inclusive Insurance.
The typical characteristics of an inclusive insurance consumer are as follows:
• Low educational level
• Low insurance Awareness
• Lack of trust in insurance
• Low level of disposable income
• Difficult access
Insurance regulators can lead efforts to advocate for the benefits of insurance, whether by ensuring that insurance awareness is a key component of financial inclusion and financial education strategies, or by adopting sector-specific strategies.
The Insurance Commission of the Philippines has published a National Roadmap for Financial Literacy in Microinsurance. Regulators can conduct insurance activities themselves or collaborate with stakeholders. In the roadmap, the following ideas were presented:
1. Build insurance awareness among demand-generating institutions and not just consumer targets but also those in a facilitating position. If government agencies such as ministries of finance, agriculture, environment and disaster risk reduction, as well as social security and national welfare authorities, appreciate the benefits of insurance, they are more likely to include insurance as an element of their policymaking. This could open up opportunities to develop innovative products, or increase insurance adoption on a larger scale.
2. Inclusive insurance can benefit institutions that serve customers or aggregators. This may include microfinance institutions, cooperatives, non-governmental organizations and agribusinesses.
The guidance under Fundamental Principles of Insurance 18 states that “increased financial awareness can be achieved, for example, through formal educational initiatives and targeted awareness campaigns led by insurers and intermediaries, individually or jointly.”
“Intermediaries’ face-to-face interaction with their clients and marketing of products to consumers puts them in a position to contribute to strengthening the public’s financial awareness in insurance matters. Supervisors therefore wish to encourage insurance intermediaries to promote financial awareness.”
3. Insurance awareness programs can be coordinated with public and private stakeholders who share a common goal. Governments, regulators, social welfare organizations, and insurers play important roles in consumer welfare. Other stakeholders can also play an important role by using various media channels. Insurance associations and consumer protection associations can also join hands as stakeholders in this.
Role of the regulator in insurance awareness:
• Build synergy between risk management awareness programs and insurance awareness programs.
• Dialogue and coordination platforms that enable sharing of facts and program impact, thus encouraging the adoption of streamlined and evidence-based programs.
• Conduct campaigns based on clear distinctions between financial education, marketing and compliance with disclosure obligations.
• Who does what and who invests for what (roles and responsibilities) Clearly define.
It is necessary to go beyond microinsurance regulations to ensure adequate access to insurance for the low-income group. The regulator needs to propose public policies that engage the private sector and other government agencies to promote risk and insurance awareness. In most cases, insurers are not interested in the inclusive insurance market. One of the main reasons for this is the lack of demand and lack of understanding about insurance.
The Insurance Regulator of India has been collaborating with various councils for inclusive insurance. In life insurance and non-life insurance, the regulator collaborates with the Insurance Council and the Non-life Insurance Council respectively so that consumers understand and are aware of the risks they face.
4. It is essential to adopt proportionate and targeted approaches to insurance awareness. It is also important that awareness and disclosure approaches evolve with market development and innovation.
• It is necessary to ensure that insurers and intermediaries understand and respect the distinction between financial education, marketing and disclosure.
• It is ensured that the distribution network has the appropriate skills and capacity to inform or educate consumers as needed.
Special attention needs to be paid to insurance awareness for claims management and dispute resolution. The clearer and better understood the terms and conditions of the insurance, the less likely the insured is to dispute the terms and conditions of the insurance, as they are mentally prepared for such a situation.
The regulator should ensure that the information that the insurers are required to disclose is appropriate for the business model implemented for group insurance.
• The regulator should facilitate the use of technology to promote insurance awareness.
• The regulator should not prevent the introduction of new insurance products on the grounds of low awareness. Consideration should be given to allowing new product offerings in the market and the consumer experience with such products should be closely monitored.
