JAMAICA ’ S PERSPECTIVE Foromic, Barbados

1. Microinsurance Microinsurance JAMAICA’SPERSPECTIVEForomic, Barbados 2012 October 1 Financial Services Commission 2012

2. OUTLINE • Overview of the Financial Services Commission • Insurance Industry • Microinsurance in Jamacia • The rationale for Microinsurance • Short-term goals • What’s on the horizon for microinsurance Financial Services Commission 2012

3. Overview • The Financial Services Commission’s (“the Commission”) mandate, is to supervise the insurance, pensions and securities industry. The Commission may be best described as an integrated services regulator. • The Commission has stipulated as part of its goals to ensure that the legal and regulatory frame work is appropriate for the effective supervision of the insurance industry. • Currently the legal and regulatory frame work does not include any provision for supervision of the micro-insurance class of business, nor does it allow for its distribution through the channels other than those currently being utilised, which are sales agents and brokers. Financial Services Commission 2012

4. The Insurance Industry in Jamaica The Insurance industry in Jamaica consist of the following: • Full service life insurance companies – These companies offer individual and group life and health products, segregated fund products and pension administration services. • “Bancassurance” Companies – These companies offer products with large savings/investment components linked to small insignificant insurance risk components. • Niche marketing by one company which provides group life insurance products to credit union members. • General insurance companies • Insurance Brokers and Agencies • Life and General Sale representatives Financial Services Commission 2012

5. Microinsurance in Jamaica • Currently, there are no known approved insurance products in Jamaica, categorically known as “microinsurance products”, neither are there any known entities that offer informal insurance products as in the case of “funeral parlours, cooperatives, community-based organisations”. • The Government of Jamaica however, has initiated steps to request the help of multi-lateral agencies to develop “agricultural insurance products for better managing non-catastrophic climatic risks in the agricultural sector at the level of individual farmers or groups of farmers.” In particular parametric agricultural insurance products for Jamaica. Financial Services Commission 2012

6. Microinsurance in Jamaica • Additionally, there are other initiatives to develop microinsurance products in Jamaica as a general insurance company has submitted proposals to offer a microinsurance product with the annual premium rates ranging from US$28.00 to US$42.00 per annum for a relatively small amount of coverage. Financial Services Commission 2012

7. The rationale for Microinsurancein Jamaica • There is a growing need for persons within the lower income segment of the population to be able to access insurance protection for the financial sustainability of families. • Additionally, the agricultural sector is regularly faced by natural disasters and requires some measure or mechanism to ensure continued development following the negative effects of these disasters. • Microinsurance helps to reduce the burden to the government when disasters occur, insurance will help to cover losses sustained by low income individuals, thus enhancing psychological security and risk mitigation. Financial Services Commission 2012

8. Short-term goals • To develop the internal capacity at the Commission to supervise entities distributing microinsurance products. • The development of the legal and regulatory framework to supervise microinsurance providers effectively. • Provide the right environment which will encourage companies within the insurance industry to develop products specifically designed to serve the low income population • Enhance financial literacy among consumers. Financial Services Commission 2012

9. What’s on the horizon for Microinsurance • The Commission has maintained its relationship with the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and the Development Bank of Jamaica (“DBJ”). In particular CCRIF has designed products that “combine risk reduction and insurance for low income groups such as small-holding farmers… in the Caribbean.” The project will be conducted on a parametric basis which involves the settling of claims on probable losses. The first phase will be targeting coffee farmers . The World Bank are now having discussion with various stakeholders. • Additionally, DBJ has included the promotion of microinsurance as a priority intervention for the micofinance sector in their strategic plan. To this end they have developed, along with CCRIF, an insurance policy which will cover the loan proceeds in the event of a default by the borrower . A pilot for this policy is schedule to be completed within the next two months. • Insurance Companies, mainly in the general insurance sector, have been pursuing the creation of policies specifically for sale as micro insurance. Already one has been approved, within the currently framework, which provides disability income benefit to a close group. Financial Services Commission 2012

10. THANK YOU Financial Services Commission 2012