Micro-insurance and Solvency II can co-exist
At a recent conference on Inclusive Insurance and Micro-insurance in Ljubljana, Slovenia, ICODA’s partner Lieve Lowet and a panel of experts debated whether there is a place for micro-insurance in the Solvency II regime. Although the European Union is deemed to be a mature insurance market, there are vast parts of the European population, especially in Central and Eastern Europe, which are underprotected. Can principles and practices of micro-insurance be applied in EU markets? Can micro-insurance thrive under Solvency II? Is Solvency II not too complex for micro-insurers?
Lowet argued that the new prudential framework for insurers in the EU is agnostic on micro-insurance. The Solvency II directive does not prohibit micro-insurance. It does not recognize or define the concept of micro-insurance either. When the framework directive was negotiated and written, there was no demand to consider micro-insurance in whatever shape or form. At the same time, the framework does not stimulate micro-insurance. So what can be done? She suggested different routes within the Solvency II and outside the Solvency II framework and highlighted the Mexican example where Solvency II and micro-insurance co-exist.
Panelists argued that a solution could be found in the application of the proportionality principle, enshrined in the Solvency II directive. Solvency II was not considered as a hindrance to the micro-insurance development by the panelists. In addition to Lowet, the panel was composed of Tadej Coroli, Management Board member of Slovenian insurer Zavarovalnica Triglav d.d, Júlia Cillíková, Executive Member of the Council and Director of the NBS Regulation Department, the Slovak supervisor, and Alexandru D. Ciuncan (Romania), Member of EIOPA’s IRSG & OPSG, who defended the point of view of the consumer, deserving equal protection.
The Inclusive Insurance and Micro-insurance Conference was brought together under the leadership of the Slovenian Insurance Agency, AZN. About 100 representatives from supervisory authorities, the industry and others involved in inclusive insurance debated whether or not the African, Asian or Latin-American business models and supervisory approaches could help increase the very low insurance penetration rates. In particular, the significant uninsured exposure to national catastrophes was cited by a number of speakers as a key area that needed to be addressed.
For more information about micro-insurance, Solvency II, and other insurance issues, contact Lieve Lowet at email@example.com