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Remarks by Mr. Napoleon Navarro, Deputy Country Director
On occasion of the Workshop on Micro-Insurance Demand Assessment
Monday 02 December
H.E. Ngy Chanphal, Secretary of State, Ministry of Interior, and Vice Chairman of Council for Agricultural and Rural Development
H.E Mey Vann, Director General of Financial Industry General Department, Ministry of Economy and Finance
Distinguished guests, Ladies and Gentlemen,
It is my pleasure to be here today to open this workshop on the Micro-Insurance with a focus on sharing findings of the demand assessment study.
On the long road that will lead Cambodia to sustainable development, social insurance will be key to reduce economic vulnerability and achieving higher human development. The threats of a rapid ageing process and of migration can undermine the informal safety nets in place today. Without Social insurance the poor and vulnerable today might become the food poor and chronic poor of tomorrow . Microinsurance can complement the government efforts of providing institutionalised Social Insurance and help today’s informal workers to invest in human capital and health to become part of the country’s formal sector and tax contributors tomorrow.
For those that do not experience it, it is very difficult to imagine what it is like to live with few dollars a day. We suppose that with very low-level income, the poor can do little for themselves beyond hand to mouth survival.
Yet we cannot be further from the truth. In fact, the poor are exposed to risk as everyone else and as everyone else they rarely consume each cents they earn. They seek, instead, to manage their money by saving when they can and borrowing when they need to and in doing so they are constrained by the facts that they do not own a lot of money, that their income is unpredictable and that it may abruptly shrink due to risk.
So two points emerge from this reflection. Financial management to deal with risk is for the poor an important part of everyday life but yet their access to adequate financial services that could help doing so is still limited. Keeping this in mind, Microinsurance is nothing more than a set of instruments tailored to the poor to help them protecting from risk. But as such it is a powerful instrument that pursues the important policy purpose of helping the poor facing the devastating impacts of unpredicatable, but yet recurrent risks.
Three aspects are especially important when dealing with Microinsurance: the regulation, the demand and the impact. Only when we truly understand demand will we design products that have the right features, the right prices, and the proper delivery mechanisms. While the nascent status of the sector does not allow us to reflect on the impact, we are here today to better understand how we can better seize the potential of the current demand and target the regulation to its specific needs.
UNDP recognises Microinsurance contribution to MDGs achievement. Access to microinsurance by the poor and disadvantaged population can contribute significantly to eradicating extreme poverty and hunger (MDG 1), promoting gender equality and empowering women (MDG 3) and developing a global partnership for development (MDG 8), as it can substantially reducing inequality making growth more inclusive and sustainable.
For this reason we welcomed the Royal Government of Cambodia request to better explore the market and are glad Microinsurance is today among the government priorities. The approval of the National Social Protection Strategy in 2011, underscored how social insurance is viewed as milestone in the long road that leads to the bulding of a welfare state. This has been well reflected in both the regulator, MEF, and the Social Protection policy maker, CARD decisions. Both actors have set up relevant policies and regulation strongly advocating for the Microinsurance market to take off.
Microinsurance holds promise as an effective tool to deepen and expand social protection in Cambodia, enabling the poor and vulnerable to better cope with shocks and stresses. I hope our discussions today will be engaging with some realistic strategies going forward in this area, which is so important for Cambodia’s inclusive growth.
I would like to thank CARD and MEF for their leadership role in this initiative.
Finally, I would like to welcome and thank our resource persons and Microinsurance experts, Clemence Tatin Jaleran and Russell Leith who travel from abroad to facilitate our discussion today. I look forward to the interesting exchange and I wish all participants the best of success.