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.

’Index Insurance: 2020 Status and Regulatory Challenges’ 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.

In this update of the 2018 report on the same topic, issues such as the one of the recognition of index insurance within the insurance legal and regulatory frameworks remains a challenge for jurisdictions.

However, various approaches to the recognition of index-based risk transfer contracts as “insurance” have unlocked opportunities to develop the market and promote access to insurance.

The regulatory approaches observed in the survey broadly fell into the following three categories:

1. 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.
2. The issuance of a legal opinion in favour 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.
3. The adoption of a pilot project, usually in the context of a regulatory sandbox, as an exception to existing law, as in Kenya.

One of the findings to support supervisors is that a new regulation is not necessarily the only way - there are other approaches to enable index-based insurance. To view some examples of regulation, visit our Interactive Inclusive Insurance World Map.  

Download the report from our Knowledge Hub.

Public Dialogue on Index-based Insurance

On Thursday, 25 March, the A2ii-IAIS Public Dialogue on Index Insurance will take place. A2ii will share the outcomes of the survey that the paper is based on and feature industry experts and supervisory authorities.

It will take place in English and French at 10:00 CET and English and Spanish at 16:00 CET.

You can register here.

Interview with Regina Simões: the status and regulatory challenges of index insurance

New on our blog is an interview in Spanish with Regina Simões, A2ii coordinator for Latin America and author of the paper on Index Insurance.

Regina explained some interesting findings of the 2020 survey and answered questions about supervisory approaches and challenges related to index-based insurance, new products, and the role of other stakeholders.

It originally took place on Twitter as an #a2iiTwitterview, and is now published in full on our blog.

Read the blog based on the interview here.

Index Insurance and the Sustainable Development Goals

Index-based insurance is increasingly looked to as a means to manage weather and catastrophic events, support food security and enhance access to insurance. It directly supports SDGs 2: Zero Hunger and 13: Climate Change. To find out more about the role of index insurance and insurance in general in the efforts to achieve the Sustainable Development Goals, visit the SDGs pages on our website.