Index Insurance: 2020 Status and Regulatory Challenges
In recent years, significant developments have been seen in index-based insurance. Good results are stemming from innovative and more accurate indices - jurisdictions are better adapting business models and distribution channels to their needs.
This publication provides an overview of how the supervisors have been dealing with the challenges related to index-based insurance during the last years, as well as insights from the industry side, especially in emerging markets and developing economies. It is based on the results of the 2020 index insurance survey, where the A2ii received comprehensive responses from insurance supervisors from 27 different countries, as well as from industry representatives.
The regulatory approaches observed in the survey broadly fell into the following three categories:
- The adoption of specific index insurance laws and/or regulations providing legal certainty for index insurance. Argentina, Puerto Rico and Uganda are examples of jurisdictions that have chosen to regulate index insurance in the last five years.
- The issuance of a legal opinion in favor of including index products under insurance law, based on the "insurable interest" at the date of contracting. Costa Rica and Brazil are examples of countries that adopted this approach.
- The adoption of a pilot project, usually in the context of a regulatory sandbox, as an exception to existing law, as in Kenya.
Additional Resources:
1. Assurance indicielle : État des lieux et défis réglementaires (2020) (in French)
2. Seguros basados en índices: Situación y desafíos regulatorios, 2020 (in Spanish)
