IMPACT OF MICROINSURANCE REGULATION IN PERU. Carla Chiappe Villegas Superintendency of Banking, Insurance and Private Pensions Funds Administrators

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Marsha Doyle
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1 IMPACT OF MICROINSURANCE REGULATION IN PERU Carla Chiappe Villegas Superintendency of Banking, Insurance and Private Pensions Funds Administrators

2 Superficie: Km2 Población Total: Población Urbana: 73% Población Rural: 27% Densidad Poblacional: 22.9 hab/km2 Incidencia de Pobreza Total: 31.3% PBI (S/. millones): PBI per cápita (S/.): Fuente: Instituto Nacional de Estadística (INEI) 2

3 Peruvian Insurance Market Empresas de Seguros Autorizadas (Al 31 de Diciembre del 2010) Ramos Generales y de Vida Ramos Generales Ramos de Vida ACE El Pacífico Peruano Suiza El Pacífico Vida Cardif La Positiva Invita Interseguro Mapfre Perú La Positiva Vida Rímac Secrex Mapfre Perú Vida Insur Protecta Principales Indicadores de Cobertura Dic-05 Dic-06 Dic-07 Dic-08 Dic-09 Dic-10 Primas de Seguros / PBI (%) 1/ 1,23 1,17 1,11 1,16 1,36 1,51 Seguros Generales 0,56 0,53 0,48 0,49 0,54 0,73 Seguros de Vida 0,67 0,65 0,63 0,67 0,82 0,78 Primas de Seguros / PEA* (S/.) 1/ Seguros Generales Seguros de Vida * PEA según la Encuesta Nacional de Hogares (ENAHO) 1/ Primas de Seguros Netas anualizadas Fuente: SBS, BCRP e INEI

Seguros / PBI (%) 1/ 1,23 1,17 1,11 1,16 1,36 1,51 Seguros Generales 0,56 0,53 0,48 0,49 0,54 0,73 Seguros de Vida 0,67 0,65 0,63 0,67 0,82 0,78 Primas de Seguros / PEA* (S/.

4 1,8% Primas de Seguros Netas / PBI (%) 1/ 1,6% 1,5% 1,4% 1,2% 1,0% 0,8% Dic-01 Dic-02 Dic-03 Dic-04 Dic-05 Dic-06 Dic-07 Dic-08 Dic-09 Dic-10 1/ Primas de Seguros Netas anualizadas Fuente: SBS y BCRP Insurance premiums: S/. 6,552 million soles ($ 2,332 million). Insurance clients: 5,593 thousand clients in property and accident insurance. 13,597 thousand clients in life insurance. 2,090 thousand clients of insurance of private pensiones system.

premiums: S/. 6,552 million soles ($ 2,332 million).

5 Microinsurance Regulation First law approved in Objectives: Promote major development. Special consumer protection legal framework. Microinsurance: Defined as a massive, cheap and low coverage insurance. Limits: $ 3,300 coverage or $ 3 monthly premium. Policies requirements to simplify documents. Allow to use new distribution channels.

Microinsurance: Defined as a massive, cheap and low coverage insurance.

6 Caracteristics of Microinsurance Products Minimum requirements for group policies, just an application certificate to begin insurance coverage. Simple coverage with minimum number of exclusions. Without previous evaluations of policyholders or insured values for the insurance coverage. Deductibles and copayments are not allowed. Payment of claims in 10 days (in reality is in 3 days). Different intermediaries (agents, salesclerks, MFI, money transfers, cooperatives, NGO, social organizations).

Without previous evaluations of policyholders or insured values for the insurance coverage.

7 Lessons learned from Regulation Consumer protection and transparency requirements are important for developing trust in microinsurance. Regulatory frameworks need to be flexible and adjust easily to the changing conditions of insurance markets. Regulatory limits on prices and benefits can be obstacles for developing innovative products. Designing process of microinsurance products is important to determine the success of the product. Insurance companies must identify the insurable group, be familiarized with their needs, and find the adequate distribution channel.

Regulatory limits on prices and benefits can be obstacles for developing innovative products.

8 New Microinsurance Regulation New definition avoiding to set any limits. Microinsurance must protect the needs of a specific insurance group. The intermediary or distribution channel must be informed to register policy at SBS. Simplified procedures through intermediaries. No exclusions should be established or they should be minimum and in accordance to the coverage. Insurance companies has the responsibility for the distribution process of their products.

The intermediary or distribution channel must be informed to register policy at SBS.

9 Microinsurance Definition Insurance that provides protection for low income population for losses due to human or economic risks. The coverage must be issued by an insurance company authorized by the Superintendency, using the simplified documents with the minimum information established by law.

The coverage must be issued by an insurance company authorized by the

10 Microinsurance Supervision Registration at SBS before marketing. Policy models are uploaded to SBS website. Minimum information requirements for the simplified documents (policy and the application certificate). Mandatory quarterly report about policyholders, premiums and losses. Insurance companies are responsible for the operations that are done through the intermediaries (giving the coverage, risk management and the application of law).

Mandatory quarterly report about policyholders, premiums and losses.

11 Microinsurance Market 37 microinsurance products registered. 9 companies have developed new products. 430 thousand new clients after specific regulation. 1,350 thousand clients in partnership with MFI. 244 thousand clients of insurance for poor farmers. Insurance companies: La Positiva Seguros, Ace Seguros, La Positiva Vida, Pacífico Vida, Pacífico Seguros, Invita, Protecta, Mapfre Vida, Cardif.

1,350 thousand clients in partnership with MFI. 244 thousand clients of insurance for poor farmers.

12 MI Products by Insurance Coverage

13 Impact of Microinsurance Regulation Need to review massive products registered before specific regulation. Most successful products have been developed in partnership with women non-governmental organizations, MFI and banks. Insurance companies have developed specialized microinsurance departments. Interest from sectorial policy makers in microinsurance for poor farmers.

Most successful products have been developed in partnership with women non-governmental

14 Conclusions and Recomendations Need to review consumer protection and supervising tools for microinsurance. Consumer protection and financial education should be present in the supervisor s institutional agenda. MI products differ significantly from massive insurance which are designed for retail and bancassurance. Market analysis, indicators and benchmarks are needed for assessing the impact of strategies. The role of intermediaries in promoting microinsurance markets need to be reconsidered.

MI products differ significantly from massive insurance which are designed for retail and bancassurance.

MICROINSURANCE REGULATION IN PERU. Carla Chiappe Villegas Superintendence of Banking, Insurance and Private Pensions Funds Administrators

MICROINSURANCE REGULATION IN PERU Carla Chiappe Villegas Superintendence of Banking, Insurance and Private Pensions Funds Administrators Microinsurance Regulation First specific law was approved in 2007