Financial inclusion
Financial stability
Financial inclusion is key on a pathway to sustainable growth and development and as such essential to “build back better” in a post-pandemic world. It is an important element in delivering fair, safe and stable financial markets in a jurisdiction and is thus an indispensable contributor to financial stability. Less than fully effective inclusion can, and has, led to financial sector instability. The link between financial inclusion and financial stability is one of the reasons for the interest of G20 leaders in this matter, endorsing the “Principles for Innovative Financial Inclusion”.
The Principles help create an enabling policy and regulatory environment for innovative financial inclusion, whilst fostering the safety and soundness of new approaches to protect financial stability as well as consumers.
Supervisory practices
The IAIS ICPs are universally applicable, including when seeking to enhance access to inclusive insurance markets. However, the application of the ICPs in practice is important to achieving the intended outcome. The emerging markets and developing economies (EMDE) jurisdictions’ perspective is therefore essential to be provided during the development of supervisory practices, in particular as financial inclusion is a cross-cutting topic for all the IAIS strategic themes such as climate, cyber, culture and conduct.
Financial inclusion was reaffirmed by the IAIS in its 2022-2023 Roadmap as a strategic theme. Its importance has significantly increased with the pandemic: On the one hand the accelerated digitalisation trend, also in insurance, has opened a vast variety of opportunities for financial inclusion products, services and markets. On the other hand, the pandemic and other man-made disasters have exacerbated the need for the most vulnerable and underserved to gain access to insurance.
Already more than 15 years ago, the IAIS adopted the so-called “access agenda” to foster understanding of how insurance supervision and financial inclusion can be complementary. Financial inclusion is understood as individuals’ and businesses’ access to fair, responsible, affordable and sustainable financial products and services, that meet their needs. In this context, financial inclusion is a driver for insurance market development.
Furthermore, seven out of the 17 United Nation’s Sustainable Development Goals (SDGs) have a reference to financial inclusion, which is considered a critical enabler to meet the goals.
The IAIS and the A2ii are part of the Network on Financial Inclusion between the Bank for International Settlement (BIS), the global Standard Setting Bodies (SSBs) and financial inclusion organisations such as the Office of the United Nations Secretary General`s Special Advocate for Inclusive Finance for Development (UNSGSA), the Global Partnership for Financial Inclusion (GPFI) and the Consultative Group to Assist the Poor (CGAP).
The IAIS A2ii Supervisory and Public Dialogues as well as the Financial Inclusion Forum are the major platforms for EMDE insurance supervisors to share practices and create knowledge ensuring that supervisory practices remain meaningful to them, reflecting financial inclusion approaches. Furthermore, the IAIS peer reviews also provide IAIS Members with practices, useful for the broader IAIS membership.
Related documents
Past events
- 28 February 2023, A2ii-IAIS Index Insurance Best Practices – Public Dialogue based on the joint A2ii-UNCDF paper on Index insurance best practices for insurance regulators and practitioners in the Pacific Island countries
- 24 November 2022, A2ii-IAIS Risk-based supervision – Supervisory Dialogue
- 12-14 October 2022, FIF-ASSAL Regional Seminar on Climate-related risks and disaster preparedness. San Jose, Costa Rica
- 29 September 2022, A2ii-IAIS Regulatory challenges and supervisory demands in facilitating remittance-linked insurance, (SDG 1) – Supervisory Dialogue based on Cenfri’s report on the topic
- 21 July 2022, A2ii-IAIS Conduct and Culture – Supervisory Dialogue
- 09 June 2022, A2ii – IAIS Q&A Session on IFRS 17 as a follow-up on the 19 May Supervisory Dialogue on IFRS17
- 19 May 2022, A2ii-IAIS Reflection on the Implementation of IFRS 17 – Supervisory Dialogue
Capacity building
The A2ii plays a crucial role as the IAIS’ implementation partner to increase awareness and foster capacity building in the area of financial inclusion and microinsurance, in particular for EMDEs, where often market development is in focus. Financial inclusion is an important contributor for sustainable growth in this respect.
Financial Inclusion Forum
Transitioning from the previous Financial Inclusion Working Group, in 2021, the IAIS created the Financial Inclusion Forum (FIF), jointly coordinated by the IAIS and the A2ii. The FIF adds to the various IAIS’ initiatives to support the efforts of its members to build capacity, share good supervisory practices and facilitate understanding of supervisory issues. Topics addressed include microinsurance, and supervision in support of inclusive insurance markets, innovation and digitalisation, consumer protection as well as pandemic and disaster preparedness and sustainability. In 2021, a major focus of the FIF was on the impact of Covid-19 on inclusive insurance, digitalisation and consumer protection.
To achieve its objectives, the FIF has outlined four major areas of activity:
- Peer exchange: Provide a platform for peer learning and exchange, moderated by topic champions who lead the discussion
- Emerging trends and risks: Discuss and deep dive into inclusive insurance trends to create knowledge for FIF members
- Raising awareness for the topic of inclusive insurance within the IAIS
- Advocacy for the need and relevance of inclusive insurance and the role of supervision at the policymaker level.
Partners
The Access to Insurance Initiative is a global partnership with the mission to inspire and support supervisors to promote inclusive and responsible insurance, thereby reducing vulnerability.
The FSI was jointly created in 1998 by the Bank for International Settlements (BIS) and the Basel Committee on Banking Supervision (BCBS). Its mandate is to assist supervisors – including insurance supervisors – around the world in improving and strengthening their financial systems.
The MiN is a non-profit association of organisations and individuals who are committed to building a world where people of all income levels are more resilient and less vulnerable to daily and catastrophic risks through improved access to effective risk management tools, including insurance services.
The IDF is on a mission to optimise and extend the use of insurance and its related risk management capabilities to build greater resilience and protection for people, communities, businesses, and public institutions that are vulnerable to disasters and their associated economic shocks.