Improving Access to Insurance for the Low- Income Population in Jamaica

1 List of Figures .......................................................................................................................................... 4 List of Tables ........................................................................................................................................... 4 List of Boxes ............................................................................................................................................ 5 Abbreviations .......................................................................................................................................... 5 Acknowledgements ................................................................................................................................. 8 Executive Summary ................................................................................................................................. 9 1 Introduction .................................................................................................................................. 15 1.1 Study background and methodology ...................................................................................... 15 1.2 Definitions and analytical framework ..................................................................................... 16 1.2.1 What is microinsurance? ................................................................................................ 16 1.2.2 What is the target market of microinsurance in Jamaica? ............................................... 17 2 Context .......................................................................................................................................... 20 2.1 Macro and socio-economic context ........................................................................................ 20 2.2 Social Security ........................................................................................................................ 22 2.3 Financial sector context.......................................................................................................... 24 3 Demand ......................................................................................................................................... 28 3.1 Focus Group Discussions ........................................................................................................ 28 3.2 Risk perception and experience .............................................................................................. 29 3.3 Risk coping mechanisms ......................................................................................................... 31 3.4 Awareness and perceptions of insurance and of insurance companies ................................... 33 3.5 Factors that impact the demand of insurance products .......................................................... 36 4 Supply ........................................................................................................................................... 38 4.1 Insurance sector context ........................................................................................................ 38 4.1.1 Insurance companies and industry bodies ...................................................................... 39 4.1.1.1 Insurance companies................................................................................................... 39 4.1.1.2 Industry bodies ........................................................................................................... 43 4.1.2 Products ......................................................................................................................... 44 4.1.2.1 Specification of microinsurance products .................................................................... 45 4.1.3 Other insurance schemes ............................................................................................... 48 4.2 Distribution ............................................................................................................................ 49 4.2.1 Traditional insurance intermediaries .............................................................................. 49 4.2.2 Alternative distribution channels .................................................................................... 50 4.2.3 Transactional platforms .................................................................................................. 51 4.2.4 Take-up of microinsurance products ............................................................................... 52 5 Public Policy, Supervision and Regulation....................................................................................... 53 5.1 Public Policy ........................................................................................................................... 53 5.2 Supervision ............................................................................................................................ 59 5.3 Regulation .............................................................................................................................. 62 5.3.1 Licensing and prudential requirements of risk carriers .................................................... 63 5.3.2 Distribution and transactional platforms ........................................................................ 65 5.3.3 Product registration........................................................................................................ 67 5.3.4 Market conduct rules ..................................................................................................... 68 2 6 Findings ......................................................................................................................................... 74 6.1.1 Context .......................................................................................................................... 74 6.1.2 Demand ......................................................................................................................... 75 6.1.3 Supply ............................................................................................................................ 76 6.1.4 Public Policy ................................................................................................................... 78 6.1.5 Supervision ..................................................................................................................... 78 6.1.6 Regulation ...................................................................................................................... 79 7 Recommendations ......................................................................................................................... 82 7.1 Regulatory regime for responsible inclusive insurance ........................................................... 83 7.1.1 Adoption of a regulatory definition of microinsurance .................................................... 84 7.1.2 Remove access barriers for risk carriers .......................................................................... 86 7.1.3 Remove access barriers for distribution channels ........................................................... 86 7.1.4 Reduce costs and effectively protect the microinsurance consumer by speeding up and simplifying processes ..................................................................................................................... 87 7.1.5 Enforce separate reporting obligations on microinsurance business ............................... 89 7.1.6 Reduce waiting period for unclaimed moneys ................................................................ 89 7.2 Improving the supply of microinsurance products with real value to consumers .................... 89 7.2.1 Improve the capacity of providers .................................................................................. 89 7.2.2 Improve the offer of needed microinsurance products ................................................... 91 7.2.3 Adopt appropriate public policies ................................................................................... 92 7.3 Improving demand and take-up ............................................................................................. 92 7.4 Capacity building on microinsurance for FSC .......................................................................... 94 7.5 Improving an efficient microinsurance market through a cohesive industry effort .................. 95 7.6 Protect microinsurance consumers effectively ....................................................................... 95 Bibliography .......................................................................................................................................... 99 Annex I- List of interviews .................................................................................................................... 106 Annex 2: Context Section ..................................................................................................................... 108 1 Development of Jamaican population income segmentation chart .............................................. 108 2 MSME Definitions ........................................................................................................................ 109 3 Distribution of Economic Activities and Labour Force ................................................................... 109 4 Distribution of those

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