Consumer Protection Consultation Call Report
“This is the third call I’ve participated on and I can say that in terms of the quality of the outputs and the conversations taking place between supervisors, it’s shown to be immensely beneficial and I think that’s consistent with the feedback that has been returned to the A2ii and IAIS from IAIS members.”
These were the opening remarks made by IAIS Secretariat staff Conor Donaldson for the third Consultation Call held on 22 May.
The third consultation call, focused on consumer protection in inclusive insurance markets, a very important area for the IAIS. It was attended by more than 40 supervisors from 17 jurisdictions across Asia, Africa, Latin America and the Caribbean.
The IAIS Application paper on Regulation and Supervision supporting Inclusive Insurance Markets states that “consumer protection needs are higher when low-income clients are served with insurance”. Low-income consumers are often not familiar with the insurance concept and therefore vulnerable to mis-selling and fraud. Supervisors therefore need to pay extra attention to consumer protection issues that may arise at different stages in the insurance process such as advertising, advice and disclosure, sales process, and enrolment, servicing and claims. While the IAIS Application paper provides guidelines for supervisors, designing effective consumer protection approaches in practice remains a challenge. Financial Inclusion Expert Martina Wiedmaier-Pfister introduced the trends in inclusive insurance markets giving rise to increasing consumer protection risks, as well as the challenges supervisors are facing in dealing with them. Craig Thorburn, Actuary and Lead Insurance Specialist at the World Bank, presented possible regulatory responses for supervisors, specifically how proportionality applies to consumer protection and how to balance consumer protection while facilitating innovation and the development of pilot schemes. Insurance supervisors from Pakistan and Brazil shared their experience and recent efforts undertaken with regards to consumer protection. Participants in the call were encouraged to share learning from their jurisdictions on what works and what does not, and put forward their questions. The key take-homes from the calls were that when responding to consumer protection risks in inclusive insurance markets, supervisors need to define their priorities for insurance market development, be willing to adjust their approach to capacity building and be proactive in terms of monitoring and evaluating client value.