Agricultural insurance: A tool for managing disasters
The 9th Consultative Forum came to a close this Tuesday, March 14, in Singapore, after an afternoon of discussions among supervisors, policymakers and the insurance industry in the Asia Pacific region on the challenges and potential of insurance to reduce the vulnerability of smallholder farmers against disasters and climate risks. Fifty participants from 14 countries were in attendance.
Hannah Grant, Head of Secretariat of the Access to Insurance Initiative (A2ii), closed the Forum highlighting that there is now greater recognition and political support, both nationally and internationally, for agricultural insurance as a tool for managing disaster and climate risks. “Coordinated action by all stakeholders – insurance supervisors, policymakers, industry practitioners – should continue in order to address the challenges of successfully implementing and scaling up agricultural insurance for smallholder farmers, and to ensure it delivers client value”, highlighted Ms. Grant.
Panellists shared their experiences with both indemnity and index-based agricultural insurance. They drew specifically on the cases of India, Kenya, Sri Lanka, Thailand and the Philippines, and highlighted the benefits of agricultural insurance: By sharing the risk with the industry, agricultural insurance allows better management of risk and, when conducted at the sovereign level, better government finances. Panellists underlined that efficient risk sharing arrangements between individuals, communities, regional government and sovereign levels are increasingly possible given developments in digital technologies, technical knowledge and global risk markets.
Implementation challenges discussed at the Forum included:
Insurance supervisors have an important role to play in providing an enabling environment, but there is currently no widely accepted approach to supervising index insurance: “Is index insurance actually insurance, or a derivative? How should insurable interest be defined? How should pilot projects be supervised in a proportionate manner, particularly while encouraging innovation?”, asked Craig Thorburn of the World Bank.
In most countries in Asia and Africa, we still see very little in terms of a framework for assessing and approving index insurance products,” remarked Agrotosh Mookerjee of Risk Shield Consultants, highlighting the need to improve supervisory understanding of the complex nature of index insurance.
“Policymakers, insurers and regulators should sit together to develop new strategies and index-based insurance solutions”, advised Dr. Yoshihiro Kawai, Secretary General of the International Association of Insurance Supervisors (IAIS). He noted that “the IAIS is currently drafting new supervisory guidance on index-based insurance to contribute to this important dialogue”.
A conference report will become available in April.
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Media Contacts
Hui Chiew, A2ii, Asia Regional Coordinator, hui.chiew@giz.de
Annalisa Bianchessi, Microinsurance Network, Senior Communications Manager, abianchessi@microinsurancenetwork.org
Stephen Hogge, International Association of Insurance Supervisors, Senior Policy Advisor for Communications, stephen.hogge@bis.org
Consultative Forum organising partners
International Association of Insurance Supervisors (IAIS)
The International Association of Insurance Supervisors (IAIS) is a voluntary membership organization of insurance supervisors and regulators from more than 200 jurisdictions. The mission of the IAIS is to promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders and to contribute to global financial stability.
Access to Insurance Initiative (A2ii)
The A2ii is a unique global partnership working to promote inclusive insurance for all by enhancing regulatory and supervisory capacity, growing financial inclusion and advancing insurance markets.
It is the implementation arm of the IAIS on inclusive insurance. A2ii generates and disseminates knowledge, builds capacity, contributes to IAIS standard-setting, promotes learning and dialogues, supports regional and country implementation and gets involved in global advocacy processes.
Microinsurance Network
The Microinsurance Network is the international multi-stakeholder platform for microinsurance experts to work together and focus on key areas of development in the sector. Its mission is to promote the development and delivery of effective insurance services for unserved people by encouraging shared learning and facilitating knowledge generation and dissemination.
InFiNe is the Luxembourg platform that brings together public, private and civil society actors involved in inclusive finance. The value of InFiNe lies in the wide range of expertise characterised by the diversity of its members.
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