Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Government will be prioritising additional policies that facilitate a more inclusive economy for Jamaicans.
Dr. Clarke notes that work to this end has commenced with the introduction of a Central Bank Digital Currency (CBDC), now being piloted, and passage of the Microcredit Act in Parliament.
He said the thrust will be further advanced with the development of a microinsurance policy framework, for which the proposed supporting legislation is being finalised for tabling in Parliament by the end of the 2021/22 fiscal year, next March.
The Minister was speaking during the Insurance Association of Jamaica (IAJ) semi-virtual microinsurance conference, at The Jamaica Pegasus hotel in Kew Kingston, on Wednesday (October 27), which was staged under the theme ‘Microinsurance – The Jamaican Perspective’.
Dr. Clarke said the CBDC, which “will be a reality in Jamaica next year”, offers the opportunity to incorporate large numbers of persons who are outside the formal financial service system, by making it more accessible.
He further stated that the Microcredit Act is intended to upgrade the level of service that persons who access the microcredit sector receive.
This, the Minister said, by making the availability of credit more accessible and inclusive, adding that “we are looking to do the same thing with insurance”.
Dr. Clarke noted that a “vast majority” of Jamaicans are outside the formal financial sector, “where formal insurance is available”.
“All Jamaicans could do with some insurance. [But] for them to be included [and] for their needs to be accounted for, [we] must create the legislative framework, which forms part of the broader national financial inclusion strategy of the Government of Jamaica,” he emphasised.
The Minister said making insurance available, particularly to persons on the lower end of the income scale, would require risks being pooled to make a product affordable.
Insurance risk pooling entails companies grouping large numbers of policyholders together to lower the impact of higher-risk individuals, by placing them alongside lower risk ones.
Companies are then able to offer higher risk policyholders more affordable coverage.
“But the Insurance Act, today, does not easily allow for the pooling of risks because of the requirement that one has to have an equitable interest in what is being insured,” Dr. Clarke indicated.
Consequently, he said steps are being taken, via legislation, to institute provisions that will allow for microinsurance products to be developed and sold in a “wholesome” way to persons at the lower end of the income scale.
Dr. Clarke said based on work under way involving the Ministry, Attorney General’s Chambers, and the Office of the Parliamentary Counsel, “I anticipate that [the Bill] will be passed in Parliament in the next [fiscal] year, and that microinsurance will be a reality in Jamaica [then]”.
“This (COVID-19) pandemic provides the opportunity for us to double down on our focus on inclusiveness and to ensure that the economic recovery that is under way with great momentum is one that is inclusive and meets everyone at their point of need,” he added.
