Brunei: Promoting Micro Insurance a Challenge
Brunei, September, 23 2014 -
Providing insurance for low-income groups is difficult as it’s challenging to find the correct product that suits their needs, a senior monetary official said yesterday.
Hjh Lily Hj Kula, deputy managing director of Autoriti Monetari Brunei Darussalam (AMBD), said that inclusive insurance is proving to be a challenge as the appropriate product for the “unserved and underserved” population segment is yet to be identified.
“Finding ways to promote inclusive insurance or micro insurance may be a bit more challenging depending on a country’s market environment,” she said in a speech delivered yesterday at the start of a five-day training programme on inclusive insurance at the Radisson Hotel.
Hjh Lily said that the goals of microfinancing institutions are more oriented towards social causes rather than making a profit. This differentiates micro-financing institutions from conventional finance industry players.
“Because of this, regulations applicable to traditional financial institutions may not be applicable to micro finance or micro insurance institutions,” she said.
Financial regulators must also be aware of the need to put in place a legal and regulatory framework that supports micro finance.
She said that the objectives of financial inclusion is to ensure that all consumers have access to financial products and services that are appropriate for their needs.
As for Brunei, she said that the country has few institutions offering syariah-compliant financing for micro businesses.
She said that the Sultanate is aiming to grow and develop the market “as best possible” and equip the industry players with necessary supervisory skills.
The five-day workshop is organised by the Deutsche Gesselschaft für Internationale Zusammenarbeit GmbH ‘Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia, ASEAN Insurance Training and Research Institute and the Insurance Institute for Asia and the Pacific.
In a September 2013 report, the vice president of the Asian Development Bank (ADB) urged ASEAN countries to be innovative and inclusive in building their financial literacy strategies.
During his keynote presentation at the ASEAN Financial Literacy Conference, Stephen Groff said that there were not enough micro insurance products from the region.
“Unaffordable and inadequate insurance products, informal insurance schemes, and low appreciation of micro-insurance are some of those hurdles ASEAN countries face,” he said at that time.
Groff said the Manila-based lender can use its extensive experience in micro financing to support ASEAN’s growth.
According to him, the ADB has approved 121 projects amounting to US$2.59 billion for micro finance and 92 projects worth US$1.5 billion in terms of financing for small and medium enterprises, public sector loans, technical assistance, grant and non-sovereign operations.