autoriteti i mbikëqyrjes financiare (amf)...2019/03/04 · by siola cironaku the albanian...

Marriott Hotel, Skopje, Macedonia

Inclusive Insurance

IIF 2019 – CEE & SEE Regional Actuarial Insurance

Conference

“a2ii inclusive insurance innovation lab” Project

February 28th, 2019

Autoriteti i Mbikëqyrjes Financiare (AMF)

Albanian Financial Supervisory Authority (AFSA)

Albanian Financial Supervisory Authority (AFSA) Str. "Dora D'istria", No.10, P.O. Box 8363, Tirana, Albania

Phone: + 355 - (0) - 4 - 2257560Fax: + 355 - (0) - 4 - 2250686

[email protected]

By Siola Cironaku

mailto:[email protected]

https://amf.gov.al/

The Albanian Financial Supervisory Authority (AFSA) is responsible for the regulation and supervision ofnon-banking financial system and the operators of the sector. The main areas of our activity areregulation and supervision:

Albanian Financial Supervisory Authority - “a2ii inclusive insurance innovation lab” Project

of insurance market and its operators

of securities market and its operators

of voluntary pension funds market and its operators

of other non-banking financial activities

The Authority primary goals are the protection of consumers’ interests, the promotion of sustainability,transparency and reliability in insurance area as well as securities and voluntary pension funds’ area.

Within it’s mission, AFSA is interested in supporting the development of markets under supervision bycooperating in exploring new markets and inclusive insurance modes.

We strongly believe that because insurance plays an important role in boosting economic growth, microinsurance is very important, so vulnerable group segment may have access and benefit from a type ofinsurance in fields such as life, health, property or affiliation.

The Authority is expecting that in the near future insurance companies under supervision to developinclusive insurance products occupying starting by 1% of their respective entire portfolio with positiveincreasing trend year by year.

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Albanian Financial Supervisory Authority (AFSA) - Future Focus, Strategy 2018 -2022!

AFSA 2018-2012 Supervisory Strategy.

AFSA has developed a 2018-2012 Supervisory Strategy that is ambitious and elements of it rely on cooperationwith strategic partners and other local and international entities .

For it’s execution and to fulfil her mission AFSA is motivated to develop comprehensive insurance markets andacquire knowledge from experienced countries through accurate markets supervision as per EU standards andsustainable development with influence and impact in the entire region.

For the insurance market, the objectives of AFSA are to:

a) promote consumer confidence through market stabilization;

b) improve the quality and effectiveness of supervision and regulation;

c) promotion of the market development; and

d) promote long-term stability.

Web: https://amf.gov.al/pdf/publikime/Strategy%202018-2022.pdf

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Albanian Financial Supervisory Authority - Insurance Market under supervision- overview in 2018

Highlights

Main features

In 2018, the gross premiums written by insurance companies amounted to EUR 134 million, or 4.52% more than a year earlier.

In this premium volume 93.24 % of the total premiumbelongs to the Non-Life market and 6.76% to the Lifemarket.

The volume of gross written premiums in Non-Life'sbusiness recorded an increase of 5.29%, while thevolume of gross written premiums in Life's businessmarked a decrease of 5.03% compared to 2017.

The market has maintained the same configurationover the years, where Life insurance has a lowerprimary volume compared to Non-Life.

Insurance market share by type in (%)

Life and Health

Insurance14%

Motor insurance

68%

Property and other Insurance

18%

Insurance market share volume by type in (mln Eur)

49

85

- 10 20 30 40 50 60 70 80 90

voluntary insurance

compusory insurance

voluntary insurance

37%compusory insurance

63%

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Albanian Financial Supervisory Authority - “a2ii inclusive insurance innovation lab” Project

In support of achieving its objectives and in line with thestrategy one of the initiatives undertaken by AFSA in2017 and in continuance in 2018 was the inclusion in theproject "inclusive insurance innovation lab"(A2ii).

This project, supported and funded by the Access to Insurance Initiative, in co-operation with the GIZGlobal Leadership Academy (GIZ) and local and international partners, aimed to promote multipartycooperation, learning by international colleagues and the development of innovative solutions that willincrease the admission of insurances to low-income and small businesses.

We are happy that we have been part of and leading in Albania this project which offers innovativemethodology in terms of the inclusion of low-income and small business people in the insurance sector.

Taking into account the economic and market situation, we believe that micro-insurance as a financialmeans to protect low-income people from specific risks in exchange for regular premiums in propagationwith the risks carried forward is very important, especially in countries such as Albania with low incomeand penetration rates.

INCLUSIVE INSURANCE INNOVATION LAB

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Albanian Financial Supervisory Authority - “a2ii inclusive insurance innovation lab” Project!

In this project was worked in several directions, in order to build trust, collaborative links , creating a dialogue onvoluntary insurances and finding forms, schemes, new products and their application, with the objective of approachingthe challenge of increasing the participation of the general population in voluntary insurance schemes.

More concretely, the work consisted in:

Mapping the ground and then reflection and lessons learned, if these imply challenges to their "theory of change" and any correction, and how these findings can be used to move forward.

Review and recalibrate ideas and approaches and plan further steps for implementation.

Prediction for a Future, Extension of the Thinking Laboratory and the on board of a wider laboratory team.

Symbolically and practically transferring the "ownership" and "responsibility" of the lab to work teams, insurance associations, other stakeholders, business designing and covering with diverse and inclusive products.

This project was a good experience in discussing and finding solutions to overcoming barriers to product costs and introducing new products suitable for vulnerable part of society, resulting in population growth who may have access to insurance products!

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Albanian Financial Supervisory Authority - “a2ii inclusive insurance innovation lab” Project- Overall!

Results so far Solutions

1. Recognition of the supervisor’s central role in promoting market development

2. Promoting change within the insurance sector3. Developing innovative solutions4. Creating strong intra-country networks5. Fostering peer exchange and support6. Strengthening individual knowledge and leadership skills 7. Promoting change within organization8. Linking to other in-country processes9. Strong country ownership of the process

Albania: Development of insurance products for the agricultural sector, greenhouse protection and

index insurance for seeding's.

More then

30participants

4countries

5Lab

meetings

How can we increase uptake of good quality insurance by vulnerable people and businesses?

Ghana: Micro and small business clinics E-platform for complaints and to rate insurance companies

Kenya: Regulatory sandbox Innovative partnerships for insurance including engagement with MNO2, Fintech’s and nano

lenders.

Mongolia: Insurance game app to improve insurance awareness Inclusive insurance roadmap for the sector linked to Mongolia’s National Inclusion Strategy Development of an Inclusive Insurance Logo Insurance Supermarket (online one stop shop for insurance) “Regulatory change to allow e-signatures”

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The project brought together a wide range of comprehensive insurance actors involved in 4 teams of selected countries, to provide an innovative solution to increase the degree of involvement of vulnerable groups in voluntary insurance schemes.

The team participating in this project has representatives both from supply and demand, from insurance companies in the country, banks, financial institutions operating in the microfinance market, insurance as well as other organizations that have activity in the financial and business field.

The Inclusive Insurance Innovation Lab was a sequence of national workshops and international platforms for key stakeholders of the inclusive insurance sector. It provides a unique opportunity to build leadership capabilities while working together to develop innovative solutions that will increase uptake of insurance.

The first national workshop 4-5 December 2017”, Tirana, Albania

“International Dialogue” on 28 February – 2 March 2018 in Akosombo, Ghana

The second national workshop 24-26 April 2018”, Tirana, Albania

“The Innovation Incubator” 19 – 22 June 2018, Durres, Albania

The 3rd national workshop 11-12 September 2018, Tirana, Albania

AFSA, in support of this project and as per project program has organized in Albania

international and national workshops:

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Using a farmers’ analogy,

1st national workshop: preparing the soil, making sure that the ground is fertile

International Dialogue: opening our minds before we decide which plants to sow

2nd national workshop: starting to put seeds (of ideas) into the ground

Innovation Incubator: presenting the seedlings and being honest with each other

to see which seeds look like they will grow and which we might need to abandon

3rd national workshop: looking at which plants have taken roots and from which we will be able to harvest fruit in the coming years.

The innovation process used in the lab: the “double diamond of design thinking”:

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Exploring areas for innovationThe key opportunities and challenges for microinsurance market growth in Albania.

Challenges• Increasing awareness and improve financial consumer education;• Identifying the target group and their needs, identify the right products and most suitable distribution channels;• Insurance companies – change of mentality is needed;• Create demand for microinsurance.

Opportunities• Positive political environment - Support of market development by state institutions;• 3 year public awareness campaign already approved and budgeted for by AFSA. Opportunity to leverage off this work and build awareness through this campaign;• Products that address consumer needs – both new products as well as products currently available in the market which just need to be better targeted;• Pair up and create partnerships with other institutions (banks, distribution channels, telecommunication authorities);• Changing weather patterns creates a good opportunity to work on climate related risk coverage's. Create new products and identify new target group;• Learn from international experiences and other countries. Get the opinion of different national stakeholders. Learn about different partnerships and collaborations.

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Themes driving the industry + “how might we” questionsThe team identified a few core themes for the Albania country team to focus on during the coming year and a number of ‘how might we’ questions to help explore them:

• Awareness

• Market and needs

• Products

• Distribution

• Partnerships

How might we increase awareness and consumer education? How might we change mentalities?How might we use climate change to increase market penetration and address needs? How might we leverage state campaign to build awareness?

How might we define our target market (for microinsurance)? How might we engage customer and get feedback to understand needs? How might we identify key risks to the target group? How might we analyze and use the data collected.

How might we develop new products using new technology and data? How might we use peer to peer platforms for developing microinsurance? How might we use developments in agriculture to develop new tailored products?

How might we reach customers fast and efficiently through digital channels? How might we partner to distribute the product (bundled products)?

How might we use international experience to identify opportunities for innovation and partnerships? How might we engage sector based organizations to develop microinsurance market?

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Topic 1: Digital Technologies

• Work on separate platforms:o A web platform could be developed for sales

channels, market, intermediaries and insurancecompanies all to provide input to. It could be aweb platform for all products – consumers couldobtain quotes from the web page.

• Keep asking for more paper and maintain obsoleteregulationo Civil code requires physical contracts/papers

needed. Changes to this will need to go with apackage of legal amendments to allow e-contracting. To support this it would be necessaryto draft changes to current regulations.

• Don’t take into account customer benefitso Need to increase transparency on important

issues and make it understandable to the client.• Don’t protect data/data breacho Data protection legislation quite heavy but not

enforced.o Need more awareness of data protection

legislation and improved data protection.

Topic 2: Agriculture• Don’t’ focus on risk appetite for the agricultural sector• Don’t see the sector as partners• Don’t create awareness• Be unwilling to work with agricultural distribution channels (new and existing)• Don’t understand the need for tailored products/one size fits all• Do not invest in expertise

Topic 3: Awareness• Don’t engage with the customer (social and other media)• Don’t pay claims or delay payment• Don’t’ get products out to customer• State insures for free!• No transparency on exclusions• Difficult payment procedures• No educational programs or outreach on financial education.• No coordination between campaign and products.

Brainstorming -discuss areas in which improvements could be considered.

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Some points that emerged:

Very low insurance penetration rate in Albania particularly of the life insurance industry

Most insurance is compulsory with limited take up of voluntary products

Micro insurance is seen as a big opportunity to the Albanian market with its low insurance penetration rates and low income population

Insurance market in Albania is dominated by Non-Life insurance with about 94% of Gross Written Premiums and Life insurance has only 6%.

The insurance market is still concentrated in traditional compulsory insurance, mainly Motor Third Party Liability (MTPL). The development of Voluntary and Life, despite some recent growth, remains a key priority for AFSA.

Albania is one of the most exposed countries to earthquake risk in the region and there is currently a World Bank project working with insurance companies to develop micro insurance products in the case of disasters

Some conclusions: Agricultural sector and

financial sector are both developing.

Time is ripe for projects to row and lab to succeed in Albania” “AFSA’s participation is important”

Trust is key! Without trust we cannot go anywhere”

“The aim is not to compete with the price but with the quality”

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Building the future of Microinsurance Market of Albania: Some points that emerged:

Most models had four main components: customer, intermediary, insurer and supervisor. Collaboration between them was mentioned as key by nearly all participants.

Insurance authority is a very important part. Some felt the insurance supervisor was the most important part of the market.Others felt what was needed was more of a partnership between supervisor and other actors in the market.

Step by step incremental progress is needed to get to the end result

Currently there are a number of ‘barriers’ that are stopping individuals that might otherwise be interested in purchasing insurance from buying it. In addition barriers are stopping insurance companies from offering products e.g. not enough statistics and data is available on what types of products low income consumers can buy and need.

Different target groups will need different products.

Insurance consumer/client is key but at the moment it is difficult to reach out to them as they are not well organized (hard to find well organized consumer groups) and they are difficult to contact. Agreement between participants that there is a need for them to reach out to customers either through going out to meet them in ‘the field’ or bringing them into the lab or through sending out questionnaires.

It was felt that a similar campaign in the insurance sector was needed to the one that took place in the banking sector to encourage people to open a bank account.

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The team has explored new ideas in the lab for designing potential inclusive insurance products based on the market condition, demand and supply, utile for the consumers and attractive for the insurance companies. In Albania they came out with 2 prototype's except ideas, that will need further elaboration as Greenhouse insurance and Seasonal Seedling insurance against Frost !

!

Working on Prototypes : Albania: Development of insurance products for the agricultural sector, greenhouse protection and index insurance for seeding's.

Group insurance rather than insurance for individuals Risks are very different, depending on which region exactly the cow is in. Payout not necessarily for the entire value of the cow, but up to a certain amount The value of different types of cows needs to be taken into account (imported and local) In Macedonia: various insurance companies form a pool to offer the insurance. Turkey and

Macedonia are good example to follow. All companies are collaborating to grow the market. Not every company needs to have a brokerage firms in all regions. Insurance association is interested in joining the team to help develop the product.

Team has designed greenhouse insurance product to insure the structure of the glasshouse (not the products inside). Were identified the main risks (storm, thunderstorm, hail, heavy rainfall) pilot to test and analyze the final features of the product; Idea to use MFIs that work with small and medium farmers as distribution channels Meetings with microfinance institutions to see if they are willing to participate MFIs will use tablets so that the enrolment process can be simplified. But physical signatures will still be needed. Simple product. Aim is to deliver as easily as possible. The claims process should also be easy (online through a simple form and sending photos through WhatsApp or Viber). Product was tested but it was not viable. Pro+: insurance companies in the market have appetite for new insurance products.Cons- : Where we are stuck: to mobilize donor funds for pilot phase to partially subsidies premiums (50% farmers, 50% donors).

Team still has to develop this prototype further. More information on index insurance is needed before the features can be developed in detail. The approach for this product is different. There are more possibilities since the whole sellers for seedlings can act as distribution channels. This

will make the product simple. There are big opportunities since insurance companies, banks, MFIs and wholesalers are interested.

Prototype: Seasonal Seedling insurance against frostInsurance solutions for farmers

Idea: Livestock insurance

Prototype Greenhouse insurance

The team had invited a number of stakeholders to join the workshop. The guests were invited to listen to the “prototype pitches” of the teams and to give feedback.

Representatives of the following organizations attended:

• JICA programme in Albania /FiAS Project (Financial Inclusion for Albanian Smallholders)• Agriculture University, Albania• Fed Invest (Financial Institution)• NOA Sh.a. (Financial Institution)• Albanian Insurance Association• Sigal Uniqa Group sh.a, Insurance Company• Albanian Financial Supervisory Authority (AFSA)

The lab team explained the two prototypes and the two professors from the Agriculture University of Albania presented a recent study they had conducted on the risk perception of farmers in certain regions of Albania. The presentations were followed by a discussion of the prototypes and the findings of the study.

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Slogan: “Be small – act big”

The team identified stakeholders that would be impacted, that could provide support, have decision-making power, have a similar experience or could act as obstacles. The team then proceeded toclustering the stakeholders according to their power and their interest in making the project happen.The team agreed that they would focus on farmers, insurance companies and donors and try to getthem more interested.

image of a turtle as a logo of

“Inov. Lab Albania”.

Meeting with external stakeholders

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Work plan The team went through the work plan and identified which steps had already been completed and what still needed to be done. Several main focus points and sub-steps were identified

• Institutionalize Lab• Assign IAA as coordinator/host, IAA has 4 main

committees (product development, actuarial committee, etc.)

• Agree lab milestones• Introduce Lab to stakeholders (promo event once

the prototype has been finalized)• Agree on meeting schedule/periodic with lab team• Create success story (Greenhouse insurance)• Finalize/refine greenhouse product (team members,

Sigal)• Meeting with potential donors: testing environment • JICA, • MFIs (Fed invest, others)

Since the greenhouse product had already been tried and lessons identified, it was perceived as a product that couldeasily be implemented since a market and a need for such a product existed.

It was noted that there was a lot of interest from various sides in agri-insurance and that different stakeholders wereworking separately on similar things (e.g. AFSA, Ministry of Agriculture, insurance companies, donors, etc.).

The lab had fostered communication and awareness amongst the different stakeholders, which was important toreach the ultimate objective!

• Finalize seedling prototype• Elias Omondi (expert)presentation• IAA Product development

Committee• Finalize seedling prototype and

handover to IAA/PDC• Engage with stakeholders• Ministry of Agriculture (subsidy

programs)• Farmer organizations• Market first product• Follow up on progress

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The lab should continue beyond December 2018.

There was agreement that not all team members would stay on board.Instead new stakeholders could join the lab. It was also noted that the labshould be a hub where different stakeholders beyond insurance companies(e.g. people from civil society) could participate to bring in their perspectives.

The meetings should take place at the association. The involvement of theProduct Development Committee of the Association was seen as important inbringing more people on board.

Having agreed that the lab should continue beyond December, was notedthat this should be the association and the authority together since thecompanies and the authority should be the main drivers of the lab.

The lab needed to be driven by the market.

Government has an important stake, but company commitment wasfundamental. The nucleus of the team should be made up of insurancecompanies (all of them), the Insurance Association, the Council of Agricultureand the Authority. The main donors in the country could also be invited.

Conclusions:

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The Inclusive Insurance Innovation Lab Objectives & Further Steps :

Institutionalize the Lab and agree on a long term programme with clear objectives

Create a success story for the lab by developing new inclusive insurance products

Increase awareness and educate people about insurance

Build public trust in the insurance market Increase insurance penetration

This is just the beginning

“innovation lab, Albania”

Inclusive Insurance

“InovLab Albania”.It is important that insurance companies to be closer to the market and understand their client, consider them as partners and offer simple and reliable products that meets their needs. This will build trust with people and the market itself to the insurance companies. The lab has been a success so far. We are bringing together stakeholders to discuss the lab’s product ideas and find solutions and are encouraged by their interest in our process.

Our Vision We envision the lab to be a leading source of inspiration for

inclusive insurance innovation in Albania and a Hub where stakeholders come together and solve problems.

We are optimistic about the future of inclusive insurance and want the lab to be the spark and catalyst for change in Albania.

We know that some stakeholders are not yet ready for our work, and our current product prototypes still need improvement.

Committed to keep going and make the necessary changes, prepare proposals and overcome obstacles along the way.

Like the turtle, our logo symbol, we aim to move slowly but with long-term objectives and secure small steps along the way. At the moment we are a small team but we can do big things.

With our energy, expertise, by being open minded and learning from our experience with our current product prototypes, we want the lab to go beyond farmers and the agriculture sector, and include more vulnerable people and small business in the future.

Thank you !

Siola CIRONAKU

Project Management UnitEmail: [email protected]

Research, Strategic Developments and Projects Directorate

Strategic Developments and Operations DepartmentAlbanian Financial Supervisory Authority (AFSA)

Str. "Dora D'istria", No.10, P.O. Box 8363, Tiranë, ShqipëriPhone: + 355 - (0) - 4 - 2257560

Fax: + 355 - (0) - 4 - [email protected]

Albanian Financial Supervisory Authority (AFSA)

Autoriteti i Mbikëqyrjes Financiare (AMF)



https://amf.gov.al/

autoriteti i mbikëqyrjes financiare (amf)...2019/03/04 · by siola cironaku the albanian...

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