Access to Finance: Developing the Microinsurance Market in Mongolia

This paper provides an overview of the development of Mongolia's insurance market in general and the microinsurance segment in particular. It showcases the existing microinsurance landscape, estimates the potential demand for microinsurance, and discusses the regulation, supervision, and policy. The paper also identifies gaps in the insurance regulatory framework that need to be bridged to expand microinsurance coverage to more households. It makes the following recommendations outlining action areas that could lead to the development of microinsurance in the country:

• Strengthen access to insurance through the formulation of a coordinated financial inclusion policy;
• Industry participants should develop sustainable microinsurance programs based on market research and good business case;
• Ease regulations on insurance intermediaries;
• Expand regulations to create options for insurance providers and intermediaries to foster innovation in product development, distribution, and sustainable business models;
• Define microinsurance products that would be allowable under both life and nonlife classifications. Clarify and maintain consistency in the definitions and insurance classification in laws and regulations;
• Improve regulations and supervisory practices on consumer protection;
• Standardize insurance terminology and translations used in the industry;
• Development organizations need to ensure their programs support capacity development without skewing the development of the overall insurance market.