Yasa Fujioka IAIS Secretariat ASSAL-IAIS Training Seminar, 19-22 November 2012
1 Seminario de Capacitación Regional IAIS – ASSAL – FIDES Lima 2009 Regulation, Supervision and...
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Transcript of 1 Seminario de Capacitación Regional IAIS – ASSAL – FIDES Lima 2009 Regulation, Supervision and...
1
Seminario de Capacitación Regional IAIS – Seminario de Capacitación Regional IAIS – ASSAL – FIDES Lima 2009ASSAL – FIDES Lima 2009
Regulation, Supervision and
Policy Issuesfor
Microinsurance in Brazil
2
Consultative Commission on Microinsurance
CHAIRMAN (SUSEP)
PUBLIC SECTOR PRIVATE SECTOR
MINISTRY OF FIANANCECNSEG
(INSURERS ASSOCIATION)
SUSEP
CENTRAL BANK
FENACOR (BROKERS ASSOCIATION)
NATIONAL SCHOOLOF INSURANCE
MINISTRY OF SOCIAL SECURITY
3
SUSEP’s Working Groupon Microinsurance
COORDINATOR
STATISTICS DIVISION
LIFE INSURANCE DIVISION
P & C INSURANCE DIVISION
TAX DIVISION
ON-SITE SUPERVISON DEPARTMENT
GENERAL SECRETARIAT
4
TimelineTimeline
September/2008 – Define September/2008 – Define “microinsurance” and “low-income “microinsurance” and “low-income population” for microinsurance population” for microinsurance purposes in Brazilpurposes in Brazil
November/2008 – Identification of November/2008 – Identification of Regulatory BarriersRegulatory Barriers
June/2009 – Identification of June/2009 – Identification of Stakeholders and their RoleStakeholders and their Role
August/2009 –Microinsurance August/2009 –Microinsurance Products and ParametersProducts and Parameters
5
TimelineTimeline
September/2008 – Define September/2008 – Define “microinsurance” and “low-income “microinsurance” and “low-income population” for microinsurance population” for microinsurance purposes in Brazilpurposes in Brazil
November/2008 – Identification of November/2008 – Identification of Regulatory BarriersRegulatory Barriers
June/2009 – Identification of June/2009 – Identification of Stakeholders and their RoleStakeholders and their Role
August/2009 –Microinsurance Products August/2009 –Microinsurance Products and Parametersand Parameters
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“Microinsurance” Definition
“Microinsurance is the insurance protection provided by licensed entities within the country against specific risks which aims fundamentally to preserve the socio-economic and personal and family situation of the low-income population by means of premium payments which are proportional to the probability and cost of risks involved, in accordance with the legislation and globally accepted insurance principles.”
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“Low Income Population”
Many variables influence the “poverty” concept
Brazil has continental dimensions and great contrasts among its different regions
Variables linked to income per capta jointly with educational variables and household variables, aiming to: 1. Preliminary investigation on the educational levels of potential microinsurance consumers2. Possible distribution channels and/or microinsurance premiums collection networks
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Population: 184,388,620
52%
48%
Economically Active Population: 96,031,971Population not classified as EAP: 88,356,649
Source: IBGE - National Household Sample Survey 2005
9Source: IBGE - National Household Sample Survey 2005
Income Distribution (monthly per capta)
970 (0,6%)
2.557 (1,6%)
7.269 (4,7%)
9.036 (5,8%)
12.046 (7,7%)
32.075 (20,5%)
40.064 (25,6%)
50.758 (32,5%)Without income
Up to $208
$208 to $416
$416 to $624
$624 to $1040
$1040 to $2080
$2080 to $4160
Over $4160
Thousand persons
10Source: IBGE - National Household Sample Survey 2006
Functional illiteracy rate of persons aged 15 years and older
34,4
27,7
17,3
5,7
41,5
37,4
23,926,0
23,2
5,7
5,5
15,8
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
up to $104 >$104 to $208 >$208 to $416 > $416minimum wage = US$208
Brazil
North
Northeast
Southeast
South
Central East
Education X Income 1
11
Average years of schooling of persons aged 25 years and olderby montlhy income household per capta by fifth
0,0
2,0
4,0
6,0
8,0
10,0
12,0
poorest20%
2o. fifth 3o. Fifth 4o. Fifth richest20%
nationalaverage
years
of
stu
dy
Brazil
North
Northeast
Sotheast
South
Central East
Education X Income 2
Source: IBGE - National Household Sample Survey 2006
12
Urban Concentration
38.849.338
28.923.782
9.994.660
19.297.623
5.729.286
99.327.856
0 to 14 years-old
15 to 49 years-old
Over 49 years-old
Age
Urban Rural
Source: IBGE - National Household Sample Survey 2005
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% urban households by monthly income per capita
20,6
27,525,3
9,6
7,0 6,9
39,0
30,5
16,5
4,93,5 3,5
12,5
25,6
30,8
12,7
9,17,7
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
up to $104 >$104 to $208 >$208 to $416 >$416 to $624 >$624 to $1040 >$1040
minimum wage = US$208
Brazil
North
Northeast
Southeast
South
Midle-East
Urban Households X Income
Source: IBGE - National Household Sample Survey 2006
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% households with utility services access
91,6
53,4
19,6
61,8
99,2
31,6
7,7
96,6 99,9
64,9
24,7
99,7
0
20
40
60
80
100
120
w ater electricity telephone internet
Brazil
North
Northeast
Southeast
South
CentralWest
Household Utility Services Access
Source: IBGE - National Household Sample Survey 2006
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“Low-Income Population”
Target: i) low-income households; ii) people working in the informal economy; and iii) low-income workers in the formal sector
Around 46% of the Brazilian population has monthly income per capta up to US$416 (2 minimum wages)
National average monthly income per capta (considering 13 wages per year): R$ 1,253 – US$ 626 – three minimum wages
Trend to informal activities observed in the economically active population (mainly among those who perceives income monthly per capita up to US$416)
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“Low-Income Population”Definition for Study
Purposes
“The low-income population in Brazil, for specific microinsurance purposes, is the segment of the population which monthly income per capta is up to three minimum wage national reference”. (US$624)
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Survey Program MI Potential Market Mortality Table (Families up to 3 minimum wage per
capita) MI Experiences abroad (translation of the five-
country case studies) Identification of Regulatory Barriers Social Insurance within the Public Sphere Social Insurance supported or practiced by Private
Sphere Microcredit and MI Synergy Insurers perspectives Collection premiums models Distribution Channels, efficiency and costs Low Income Demand for Private Insurance MI Economic and Social Benefits
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TimelineTimeline
September/2008 – Define September/2008 – Define “microinsurance” and “low-income “microinsurance” and “low-income population” for microinsurance population” for microinsurance purposes in Brazilpurposes in Brazil
November/2008 – Identification of November/2008 – Identification of Regulatory BarriersRegulatory Barriers
June/2009 – Identification of June/2009 – Identification of Stakeholders and their RoleStakeholders and their Role
August/2009 –Microinsurance August/2009 –Microinsurance Products and ParametersProducts and Parameters
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Identification of Identification of Regulatory BarriersRegulatory Barriers
Assessment of the legislation which Assessment of the legislation which regulates the insurance sector – around regulates the insurance sector – around 90 rules (laws, resolutions and circulars)90 rules (laws, resolutions and circulars)
Evaluation of regulation impact – Evaluation of regulation impact – identification of identification of barriersbarriers, , opportunities and gapsopportunities and gaps in the in the legislation and also legislation and also risks and threats risks and threats due to lack of protection elements.due to lack of protection elements.
Meetings with private sector Meetings with private sector representatives – operational and representatives – operational and marketing experiencemarketing experience..
2020
Identification of Identification of Regulatory BarriersRegulatory Barriers Assessment Conclusions 1Assessment Conclusions 1
No relevant barriers or restrictions No relevant barriers or restrictions were foundwere found The only restriction refers to The only restriction refers to legal form of legal form of
insurance providersinsurance providers Legislation is flexible to regulate MI activities Legislation is flexible to regulate MI activities
within the scope of the Supervisory Authoritywithin the scope of the Supervisory Authority
Current legislation Current legislation allows different distribution allows different distribution channelschannels
Current legislation Current legislation allows the creation of a MI allows the creation of a MI broker - broker - qualification by means of a simplified qualification by means of a simplified technical training, including minimum necessary technical training, including minimum necessary requirements requirements
2121
Identification of Identification of Regulatory BarriersRegulatory Barriers Assessment Conclusions 2Assessment Conclusions 2
Current legislation Current legislation allows hiring insurance allows hiring insurance through ticketsthrough tickets (simplified form of (simplified form of commercialization)commercialization)
Tax issue is extremely relevant for making Tax issue is extremely relevant for making MI products viableMI products viable – sensitization of – sensitization of stakeholders is vital to the success of actionsstakeholders is vital to the success of actions
Bank Correspondents Bank Correspondents play a fundamental role play a fundamental role in the collection of premiums – coordinated work in the collection of premiums – coordinated work should be jointly developed by SUSEP and should be jointly developed by SUSEP and Central BankCentral Bank
Specific license to sell microinsuranceSpecific license to sell microinsurance
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TimelineTimeline
September/2008 – Define September/2008 – Define “microinsurance” and “low-income “microinsurance” and “low-income population” for microinsurance population” for microinsurance purposes in Brazilpurposes in Brazil
November/2008 – Identification of November/2008 – Identification of Regulatory Barriers.Regulatory Barriers.
June/2009 – Identification of June/2009 – Identification of Stakeholders and their RoleStakeholders and their Role
August/2009 –Microinsurance August/2009 –Microinsurance Products and ParametersProducts and Parameters
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Identification of StakeholdersIdentification of Stakeholdersand their Roleand their Role
21 Stakeholders 21 Stakeholders were identified were identified at at Macro and Meso LevelsMacro and Meso Levels
At At Micro Level Micro Level were assessed:were assessed: insurance providers (regulated insurance providers (regulated
under Insurance Law, under other under Insurance Law, under other legislations and non-regulated)legislations and non-regulated)
intermediaries and distribution intermediaries and distribution channelschannels
policyholders and beneficiariespolicyholders and beneficiaries
24
Identification of StakeholdersIdentification of Stakeholdersand their Roleand their Role
At least 7 different distribution channels At least 7 different distribution channels were assessedwere assessed brokers, churches, coops, NGO´s, MFIs, Banks brokers, churches, coops, NGO´s, MFIs, Banks
and Bank Correspondents, Department Stores, and Bank Correspondents, Department Stores, Public Utility Providers, Capitalization Public Utility Providers, Capitalization Companies, among othersCompanies, among others
Role of Donors and Development Agencies Role of Donors and Development Agencies were evaluated were evaluated
Identification of key-divisions within the Identification of key-divisions within the Supervisory AuthoritySupervisory Authority
As a result, more stakeholders get As a result, more stakeholders get involvedinvolved
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TimelineTimeline
September/2008 – Define September/2008 – Define “microinsurance” and “low-income “microinsurance” and “low-income population” for microinsurance population” for microinsurance purposes in Brazilpurposes in Brazil
November/2008 – Identification of November/2008 – Identification of Regulatory Barriers.Regulatory Barriers.
June/2009 – Identification of June/2009 – Identification of Stakeholders and their RoleStakeholders and their Role
August/2009 –Microinsurance August/2009 –Microinsurance Products and ParametersProducts and Parameters
26
MI Products
Potential ProductsPotential Products Credit Life (non compulsory)Credit Life (non compulsory) Group Life + Personal AccidentGroup Life + Personal Accident FuneralFuneral
Regulation should encourage new Regulation should encourage new products for low incomersproducts for low incomers
Products well designed will define the Products well designed will define the targettarget
Balance in the regulation: Innovation X Balance in the regulation: Innovation X Consumer Protection (product Consumer Protection (product regulation)regulation)
27
MI Parameters
Term of the contract (allow flexibility and encourage insurance culture)
Maximum benefit values (defined by line)
Reduced time limits for claim payments (including procedures)
Documents required (by line) in case of claim
Previous approval required for MI products
28
MI CommissionMI CommissionMain ProposalsMain Proposals
Specific license for insurers to sell MI Specific license for insurers to sell MI – – differentiated treatment over MI operationsdifferentiated treatment over MI operations
Microinsurance Products X traditional Microinsurance Products X traditional insurance productsinsurance products
Consumer Protection – product regulationConsumer Protection – product regulation Creation of a microinsurance broker - Creation of a microinsurance broker -
qualification by means of a differentiated qualification by means of a differentiated technical training, including minimum technical training, including minimum necessary requirements necessary requirements
Microisurance correspondentMicroisurance correspondent – to regulate – to regulate the relationship between insurers, insurance the relationship between insurers, insurance consumers and intermediariesconsumers and intermediaries
29
Lessons learned It is fundamental to know the main and
specific characteristics of the target population of MI
It is important to take into account cultural features
Be aware of the level of development of the country financial system, including limitations for regulator/supervisor
It is critical to involve main stakeholder in the process (both public and private sector)
30
THANK YOU!THANK YOU!
Christine de Faria ZettelChristine de Faria [email protected]
www.susep.gov.brwww.susep.gov.br