What's Happening?
A recent study by the Geneva Association has identified significant barriers to the uptake of health and life insurance in emerging economies, despite the growth of digital payments and savings products.
The study highlights that insurance remains one of the least developed aspects of financial inclusion in these regions. Key barriers include high costs and a lack of awareness, particularly in health, disability, savings-type life, and property insurance. The study notes that medical costs are a major financial concern in most surveyed markets, reflecting limited social protection and high out-of-pocket expenses. China and India lead in insurance usage, with about three-quarters of respondents holding at least one policy, aided by digital platforms and state-led programs. The study emphasizes the need for commercial innovation, public policy, and regulation to work together to close protection gaps.
Why It's Important?
The findings of this study are crucial as they highlight the potential for insurance to play a significant role in financial inclusion and economic stability in emerging economies. By addressing the barriers to insurance uptake, these countries can help households absorb financial shocks such as illness, accidents, or natural disasters, thereby preventing them from falling into poverty. Furthermore, increased insurance coverage can support business activities by reducing financial risks. The study suggests that emerging economies have an opportunity to rapidly expand insurance coverage through the use of digital tools, public-private partnerships, and supportive regulations. This could lead to improved economic resilience and growth in these regions.
What's Next?
To address the identified barriers, the study recommends several strategies. These include the development of simple insurance products, digital distribution channels, and affinity partnerships. Additionally, the study suggests that government subsidies, digital identity systems, and insurance education are critical policy tools that can enhance insurance uptake. Regulators are encouraged to enable innovation through simplified licenses, digital onboarding rules, and sandbox frameworks while maintaining consumer protection. By implementing these strategies, emerging economies can potentially increase insurance coverage and improve financial inclusion.
