More than 50 countries now have dedicated regulatory frameworks for inclusive insurance. Yet private sector engagement is still often constrained by misalignment of those frameworks and supervisory timelines. The problem is how rules are designed, interpreted, implemented, and coordinated in practice—and how that shapes not just what’s allowed, but what is commercially viable. In short, inclusive insurance is not failing for lack of rules, but is constrained by regulatory frictions that make viable models unworkable at scale.
Consider what happens when supervisory processes are slower than what is required to meet customer needs. In Kenya, a parametric drought insurance product triggered supervisory concerns around basis risk and the lack of an assessment framework. The product was eventually realigned with farmer cycles, but approval delays meant that by that time, funding had expired, and the pilot could not launch.
That dynamic shows up again and again in bringing inclusive insurance products to market: not a single “deal breaker,” but a chain of frictions that turn workable models into one-off pilots. We need regulation that makes inclusion investable, including simpler product filing, greater industry and supervisory engagement, and cross-sector collaboration. But first, let's examine the frictions that industry practitioners keep returning to —and what they imply for the next phase of reform. Four recurring frictions stand out.
1. When approval timelines miss the season
Lengthy and inflexible product approval processes remain one of the most significant constraints for insurers working in inclusive and climate insurance. In some markets, parametric climate insurance products must be refiled even for minor changes. In others, timelines stretch well beyond agricultural cycles or donor funding windows. Where insurance authorities lack the capacity to assess new products or technology solutions associated with a product, the result is prolonged back-and-forth.
Delay is not the only outcome—significant momentum is lost as well. Insurers operating across regions also note that even when products are conceptually identical, approval is required country by country, with no fast-track mechanisms. That makes regional scale effectively impossible.
2. The last mile is where rules collide
Inclusive insurance reaches low-income clients when it rides on a service the customer is familiar with (i.e., credit, health, or telco services; or agricultural inputs, etc.). In practice, bundling is one of the most effective ways to reach low-income clients. However, traditional insurance regulations may not allow for it. Even where bundling is technically permitted, differences across banks, MFIs, and insurers create uneven playing fields. This can also give rise to a regulatory gap where responsibility lies with a different supervisory authority.
These constraints are often driven by legitimate consumer protection concerns. But from the private sector perspective, they frequently translate into a missed opportunity for partnerships that could generate access, lower costs, and foster sustainable programs.
3. Small premiums, heavy taxes
Affordability is central to inclusive insurance. Yet taxes and levies can turn small-ticket products into non-starters.
Examples include Malawi, where Value-added Tax (VAT) and additional levies together significantly increase premium costs; and the Philippines, where VAT and documentary stamp taxes materially raise the price of non-life microinsurance.
Some governments have shown that a different approach is possible. For example, Fiji’s VAT exemption for parametric disaster insurance demonstrates how targeted tax policy can unlock demand without requiring direct fiscal outlays. From the private sector’s perspective, governments often collect little revenue from taxing inclusive insurance—while bearing much higher losses and costs when households, farmers, or small enterprises remain uninsured.
4. Too many mandates, too little coordination
A recurring theme is the lack of coordination between the insurance authority, the central bank, and other ministries and agencies (i.e, health, agriculture, disaster management, cooperatives, and weather data.
For example, agricultural insurance subsidies may be administered separately from health or disaster risk financing, making accessing subsidies for bundled health and climate products administratively impossible. According to one testimony, in Burkina Faso, agricultural insurance bundled with health becomes ineligible for subsidies because ministries operate under separate mandates and rules.
For insurers, this fragmentation translates into uncertainty—one of the strongest deterrents to long-term engagement and investment.
From constraints to enablers: what the insurance industry is actually asking for
The private sector message is consistent and pragmatic. Insurers are not asking for deregulation. They are asking for regulation that makes inclusion investable: rules that are predictable, proportionate, and flexible enough to allow for testing innovations, and aligned across government agencies.
In practice, this means proportional, risk-based approval processes for products and technology solutions; flexibility to modify products without restarting from zero; clear, enabling rules for alternative distribution and partnerships; incentives such as tax breaks for climate risk insurance premiums, and better coordination across government agencies. CGAP member and partner UNCDF demonstrated this in Fiji, where it was able to negotiate a tax exemption on climate risk insurance premiums — a concrete example of what becomes possible when the right actors engage authorities with a shared agenda.
Country experience shows that structured collaboration between industry and supervisory authorities is one of the most effective levers for unlocking these enabling conditions. In Ghana, the National Insurance Commission (NIC) has institutionalized this approach by convening working groups that bring together the Ghana Insurers Association, the Insurance Brokers' Association of Ghana, and other private sector actors alongside the NIC to jointly develop guidelines, products, and platforms for inclusive insurance. This kind of standing multi-stakeholder forum — where the supervisor is not just a gatekeeper but an active co-designer — has helped Ghana anchor inclusive insurance reforms in its landmark Insurance Act 2021. The Act introduced dedicated licensing categories for microinsurance and explicitly defined it.
In Senegal, a different but equally instructive model emerged around parametric insurance for smallholder farmers. Multi-stakeholder discussions have been taking place, drawing together the national agricultural insurer CNAAS (Compagnie Nationale d'Assurance Agricole du Sénégal), farmers' organizations, private brokers, international development partners, and technical agencies providing weather and satellite data. More recently, a 2023 workshop convened by UNDP, the World Bank Group's Global Index Insurance Facility, and the Insurance Development Forum's Inclusive Insurance Working Group brought over 50 stakeholders together to advance an inclusive insurance roadmap for the country — a process that has since helped shape how insurance authorities, insurers, and public agencies coordinate around index-based product design and approval.
These examples point to a common pattern: when insurance authorities create durable, institutionalized spaces for dialogue with the private sector — rather than issuing frameworks in isolation — the result is not just better rules, but rules and processes that the market can actually use. For example, for regulators this could mean faster, proportionate approval processes, flexibility to modify products; for donors/partners, supporting supervisory capacity and cross-agency coordination; and for industry open dialogue with insurance authorities.
This is precisely where CGAP is directing its efforts. Through its supervisory engagement work, CGAP supports insurance authorities in designing frameworks that are not only technically sound but operationally workable for the private sector. Recently, CGAP held a private convening to identify key challenges to present to insurance authorities. CGAP also works with standard-setting bodies to ensure that global guidance on inclusive insurance reflects the realities of low-income markets.
Inclusive insurance will scale only where regulation and supervision make inclusion commercially viable, operationally feasible, and predictably governed. The next phase of reform is not about writing more frameworks. It is about making the existing rules work—at the intersection of policy intent and market reality.
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