55th Midi de la microfinance et de l'inclusion financière 

55th Midi de la microfinance et de l'inclusion financière 

Please click on the image to see the pictures of the Midi (6 July 2022 in the auditorium of the Banque de Luxembourg)

Towards sustainable and inclusive insurance    

ADA organised a Midi de la microfinance et de l’inclusion financière panel debate at Banque du Luxembourg on 6 July to bring Luxembourg’s insurance professionals and financial and social inclusion actors together to discuss how the local insurance sector can play their part in addressing the global protection gap.

Midi de la Microfinance et de l’inclusion financière

The panel discussion, was moderated by Matthew Genazzini, Project Officer at ADA, offered insights from AXA Emerging Customers, the inclusive insurance division of a major insurance company, AM Best, a credit rating agency specialized in insurance industry, and the Luxembourg-based Microinsurance Network (MiN). 

Luxembourgish insurance sector explores ways of strengthening the social aspects of their ESG commitments with international inclusive insurance experts.  

Like many other large businesses, insurers mainly focus on implementing green policies as part of their efforts to integrate ESG (Environmental, Social, and Governance) criteria into their business model. Social initiatives tend to focus on HR topics such as encouraging more diversity in the workforce and more women in leadership. While laudable, they often have an internal focus and their broader developmental impact is therefore limited.

This lack of external social awareness by some insurance companies is very unfortunate as there is a real need for inclusive insurance - it is estimated that seven out of ten people in developing countries are not insured. Swiss Re Institute recently estimated the annual economic cost of this protection gap in terms of health care, untimely death, and climate disasters at a new all-time high of US$ 1.42 trillion. Lower-income households shoulder a disproportionate share of this burden and their resilience to shocks such as natural disasters or illness is expected to weaken further due to the accelerating pace of climate change and the COVID-19 pandemic.

Large potential for strengthening inclusive insurance in Luxembourg

While international initiatives such as the United Nations Principles for Sustainable Insurance (UNEP-FI PSI) and the European Union’s Sustainable Finance Disclosure Regulation (SFDR) as well as recent major conferences on the protection gap are creating awareness of this pressing issue, the discussion has been rather muted so far in Luxembourg. 
This is quite surprising, given that many international insurers who also serve emerging markets have offices here. In addition to the social imperative to insure and thereby strengthen the resilience of low-income people, emerging markets also offer attractive business opportunities for global insurers. Following the Covid pandemic, health became the largest insurance product line in Africa and Asia, reaching 104 million people in 30 countries, according to the Microinsurance Network’s Landscape of Microinsurance 2021 Study.

Katharine Pulvermacher, Executive Director of the Microinsurance Network, Luxembourg, stated: “Insurance is pivotal to economic growth, development and social stability. Insurers who actively support financial inclusion are ensuring the future of insurance. Could there be a stronger case than this?”

Watch the whole discussion on video: