IADB/A2ii joint Project:

2. IADB/A2ii joint Project: Implementation of Regulatory and Supervisory Standards for Microinsurance Markets in LAC Project learnings Colombia Superintendencia Financiera de Colombia Río de Janeiro, April2016

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4. 1. Demandfindings • The most important factors affecting inclusive insurance demand are: • There are several problems regarding financial education of insurance consumers: The diagnostic shown unawareness of insurance policies, leading to misinterpretation and false expectations of the product. Regularly, consumers do not file claims because they do not understand the insurance coverages. • Insurance coverages are not focused on people’s needs: Life and funeral insurance are considered relevant for low-income population but not always available. Other type of policies are not understood. • Insurers and the government must work on financial education initiatives. Making simple, comprehensible and useful insurance products has to be the main objective.

5. 2. Supplyfindings • 1. Theindustry has developedproductswithoutanyspecific microinsurance regulation. A large proportion of insurers, as part of their business strategy to expand its clientele, have promoted insurance inclusion for the currently uninsured population. The inclusion of low-income population (Social strata 1, 2 and 3) has been an indirect consequence of this development. • However, this development has not been accompanied by (i) robust criteria for identifying microinsurance from other insurance products, nor (ii) accountable metrics for quantifying and identifying them accurately. • 2. The current microinsurance supply has taken into account the specific needs of low income or vulnerable population. A lack of demand studies behind the products developed is found. Therefore, there is low diversity of products (mainly life and disability) and low rates of renewal. Most of the products in the market are the same offered to other income brackets but cheaper. Requisitos uniformes para cualquier persona que coloque seguros en ejercicio de la intermediación.

6. 3. Regulatory/supervisoryfindings Preparación académica obligatoria y acreditación de idoneidad The Colombian Government is committed to promote access to insurance as part of the financial inclusion strategy. There is a clear emphasis on promoting access to insurance against different risks. There are several government initiatives regarding specific products. Insurance regulation does not impose strong barriers for the microinsurance development. There are some resolvable barriers regarding access to distribution channels and the absence of a regulatory definition of microinsurance. Regulation of mass market insurance (offered through utilities companies, supermarkets and similar) must evolve to protect the consumers. The diagnostic shows that regulation of the products offered through alternative channels is not robust enough to protect the consumers. Insurance offered as a group insurance has to give enough information to consumers. Información mínima a suministrarse a los consumidores Mínimos de gobierno corporativo relacionados con los IS Centralización de información sobre IS Requisitos uniformes para cualquier persona que coloque seguros en ejercicio de la intermediación.

7. 4. Regulatory developments Preparación académica obligatoria y acreditación de idoneidad AML/CFT has been simplified for low premium. The SFC issued a rule of practice (CE 034/2015) by which certain insurance products were excepted from some KYC requirements (the obligation of interviewing the client and filling a form). Also, simpler requirements regarding client identification. Use of multiple resource net has been regulated for insurance product distribution. The SFC issued a norm(CE 49/2015) dictating the terms and conditions under which insurance companies may distribute their products through bank branches. Insurance intermediaries’ suitability requirements were established. CE 50/2015 established the guidelines that individuals must follow in order to be validly apt to sell insurance products. The distribution of insurance products through banking correspondents is currently under regulatory design. The SFC is developing this regulation in order to open another channel of distribution. Información mínima a suministrarse a los consumidores Mínimos de gobierno corporativo relacionados con los IS Centralización de información sobre IS Requisitos uniformes para cualquier persona que coloque seguros en ejercicio de la intermediación.

8. 5. Other measures in Colombia Preparación académica obligatoria y acreditación de idoneidad • Colombia iscurrentlystudyingtheconvenience and viability of creating a specificlegal categorization of microinsurance. • Throughthe A2ii project, Colombia isconsideringalternativesformeasuring and controlling microinsurance products. • The SFC shall open communicationchannelswithotherpublicauthorities in mattersthat excede ourownpowers. Información mínima a suministrarse a los consumidores Mínimos de gobierno corporativo relacionados con los IS Centralización de información sobre IS Requisitos uniformes para cualquier persona que coloque seguros en ejercicio de la intermediación.

9. 5. Other measures in Colombia The A2ii projectwillanswerourbigquestion: Does Colombia needanspecialregulatoryframeworkformicroinsurance?

10. 6. Challengesfor Colombia Preparación académica obligatoria y acreditación de idoneidad Información mínima a suministrarse a los consumidores Mínimos de gobierno corporativo relacionados con los IS Centralización de información sobre IS