Getting insurance markets ready for the next decade

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Insurance products are emerging as a development priority in developing countries and for many, the challenges of an underdeveloped insurance sector can compromise economic ambition.  This not only about scaling up the capacity of these markets to support a faster recovery for households from natural disasters such as earthquakes or floods in the economies. Equally important is how these markets and the insurance products they offer can respond to the long-term capital needs for building resilient infrastructure in many vulnerable contexts across regions.  

In East African countries, for example, less than 10 in 100 people are estimated to have any formal insurance.  

Formal insurance update graph
Financial Sector Deepening Uganda

Together with the DFID-funded insurance market development program, our team conducted deep-dive diagnostics “Insurance for inclusive and sustainable growth: Imperatives for action from a four-country synthesis” offering insights on challenges and countries’ experiences in addressing them. 

Our work  on maximizing the full potential of insurance products is key to achieving economic progress and sustaining its impact for low income and poor families.  We recently published two reports highlighting the World Bank’s engagement and interventions in the sector. These reports are part of a broader insurance market development program funded by Department for International Development (DFID), the UK government. 

The first report - “Can Interventions Spur Development of the Insurance Sector?” – introduces a dataset of Financial Sector Reform and Strengthening (FIRST) projects, and lessons learned from previous interventions. The report analysis reveals that, on the whole, FIRST projects have been beneficial to insurance premium growth and penetration change in recipient countries; notwithstanding the challenge of differentiating the contribution of individual project interventions on overall impact.  

The second report, “Albania: Insurance Market Development”, presents the case of the Albanian insurance market as an example of how World Bank-supported interventions have made a difference. Strengthening insurance regulations and supervision coupled with economic development over the last two decades positively affected the development of the insurance market in Albania. 

FIRST-funded projects supported legal and regulatory frameworks while contributing to a market liberalization strategy and capacity building. The outcome, as highlighted in the report, was very positive for Albania.  More specifically, since the World Bank’s engagement with the FIRST Initiative to support insurance projects in 2008, insurance penetration grew from 0.65% to 1.04% in 2017, twice as fast as the nominal GDP growth. 

As a team working on the Long-Term Finance agenda in many countries, we have been able to demonstrate how technical assistance can have the most impact.  When used to complement other diagnostic, lending and policy support; sharing international practice and extending support to insurance supervisory authorities to align with their country priorities and context is a formula for success. Grounding the development of the insurance sector within the context of wider financial sector reforms is crucial to addressing risks to progress and sustainability; most of which impact low income and poor segments of society.   Last, but not least, a well-managed Motor Third Party Liability (MTPL) insurance market cannot be underestimated, given the fact that the MTPL is the first insurance product that many people buy as mandatory in emerging countries.  We have learnt that if regulators don’t get this right, it is very difficult for the rest of the market to thrive.

The authors would like to thank Marlon Rawlins, Inna Remizova, Craig Thorburn and Peter Wrede whose work contributed to this blog.


Anderson Caputo Silva

Lead Financial Sector Specialist

Tetsutaro Shindo

Financial Sector Specialist

Fiona Stewart

Lead Financial Sector Specialist

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