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Microinsurance Network Annual Report 2019

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International concern about the impacts of climate change and natural disasters has brought the insurance community together to build resilience and manage risk more effectively. At a time when insurers should be leveraging their risk management skills and not merely selling risk transfer policies, some companies want to reduce their exposure to climate and NatCat risks, potentially shifting the burden to governments and taxpayers. Such thinking not only undermines development objectives, but makes little business sense in the transition to a digital economy.

The COVID-19 pandemic has dramatically added to the risks confronting the poor and vulnerable in countries where health and social care is already stretched, and future welfare provision is far from certain. With climate and health disasters fast becoming the new normal, insurers have a unique opportunity to go beyond ‘business as usual’ and help governments, businesses and households manage the risks they face. The industry’s actions now will determine its relevance after the crisis.

Against this increasingly uncertain background, protecting low-income households and small businesses is even more important than before. Scaling up inclusive insurance is more urgent now than ever. It is encouraging to see signs of increasing interest in using microinsurance to transfer risk, sometimes complemented by macrolevel sovereign risk management and aggregated meso-level solutions. InsurTech has the potential to help achieve the scale needed, but the lack of digitalisation in some markets is frustrating. Progress on digital payments remains slow. Regulators need to be more open to innovative solutions for serving low-income consumers. We need to rethink the way we regulate technology and innovation if insurance is to grow and significantly reduce the impact of risk in low-income markets.


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