ADB Supports Microinsurance for Millions of Poor in PRC, Mongolia

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is providing technical assistance to help remove barriers to microinsurance development in the People’s Republic of China (PRC) and Mongolia which could benefit millions of poor families and unlock household savings for productive economic use.

In low-income households, a death, illness, or loss of income or property from a disaster or animal epidemic could plunge the family into debt and perpetuate poverty. Insurance can play a vital role in reducing the risks of an untoward event, but most standard products are out of the reach of poor families. Microinsurance offers a solution, but its development has been hindered by poor market information and regulatory hurdles.

A two-year $750,000 grant from the ADB-administered Regional Cooperation and Integration Fund will be used to examine market supply and demand for microinsurance in PRC and Mongolia, and address policy, regulatory and institutional barriers. It will also help industry regulators draw up and implement reforms to spur growth of microinsurance products in the two countries.

ADB will work with the Access to Insurance Initiative (A2II), a global program launched in 2009 with the International Association of Insurance Supervisors (IAIS) - the international standard setting body for insurance regulation and supervision. The Initiative seeks to link development agencies and industry supervisors to promote expanded insurance services to the poor worldwide.

A Memorandum of Agreement has been signed under which the German development agency and secretariat of the initiative, GTZ, will provide cofinancing of about $178,000 and will engage in and support work agreed with ADB and A2II. The ADB, A2II, and GTZ teams will work with the Chinese Insurance Regulatory Commission and Mongolia Financial Regulatory Commission.

“Our agreement with GTZ makes us the first international financial institution to effectively buy into the Access to Insurance Initiative to expand its work into specific countries, and we are providing significant resources to help regulators and insurance companies better understand and promote the responsible growth of microinsurance,” said Betty Wilkinson, Senior Finance Specialist in the East Asia Department.

http://www.adb.org/Media/Articles/2010/13313-east-asia-microinsurance-projects/