Business and Economics > Insurance

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International Monetary Fund. Fiscal Affairs Dept.

Disasters have posed significant economic costs to Bangladesh, and financing needs associated with disaster response are estimated to be substantial. Bangladesh has put in place fiscal mechanisms, social protection programs, and financial instruments to respond to natural disasters. While the country has adequate resources for recurrent disasters, financing gap for moderate and severe disasters remains large. The government could strengthen fiscal policy mechanisms to help close the financing gap and make social programs more shock-responsive and scalable in times of disaster. Bangladesh could also better leverage financial sector instruments to enhance disaster resilience.

International Monetary Fund. Fiscal Affairs Dept.
Disasters have posed significant economic costs to Bangladesh, and financing needs associated with disaster response are estimated to be substantial. Bangladesh has put in place fiscal mechanisms, social protection programs, and financial instruments to respond to natural disasters. While the country has adequate resources for recurrent disasters, financing gap for moderate and severe disasters remains large. The government could strengthen fiscal policy mechanisms to help close the financing gap and make social programs more shock-responsive and scalable in times of disaster. Bangladesh could also better leverage financial sector instruments to enhance disaster resilience.
International Monetary Fund. European Dept.

Liechtenstein’s pension system is structured around a three-pillar framework designed to provide a balanced, sustainable, and secure retirement income. This well-capitalized system aims to safeguard a basic income level for all employees while encouraging supplemental private savings and income.

Juliette Caucheteux
,
Jonas Nauerz
, and
Svetlana Vtyurina

Extreme weather has profoundly affected countries across South America (SA), given the importance of the agricultural sector for the economies. However, these effects have not yet been properly measured. In our study, we construct a unique dataset of high-frequency satellite data on temperature, precipitation, and a Normalized Difference Vegetation Index (NDVI) that proxies the agricultural yield in selected countries. In particular, we then examine the effect of droughts on agricultural yields (soy output) and find that they have a significant negative impact and that there is heterogeneity in the response across countries. While insurance could help protect farmers against severe losses, coverage in the region is low, and barriers remain high. Building on existing literature and using a calibrated structural model, we highlight the benefits of insurance for Total Factor Productivity (TFP) and offer some recommendations for its expansion.

Juliette Caucheteux
,
Jonas Nauerz
, and
Svetlana Vtyurina
Extreme weather has profoundly affected countries across South America (SA), given the importance of the agricultural sector for the economies. However, these effects have not yet been properly measured. In our study, we construct a unique dataset of high-frequency satellite data on temperature, precipitation, and a Normalized Difference Vegetation Index (NDVI) that proxies the agricultural yield in selected countries. In particular, we then examine the effect of droughts on agricultural yields (soy output) and find that they have a significant negative impact and that there is heterogeneity in the response across countries. While insurance could help protect farmers against severe losses, coverage in the region is low, and barriers remain high. Building on existing literature and using a calibrated structural model, we highlight the benefits of insurance for Total Factor Productivity (TFP) and offer some recommendations for its expansion.
International Monetary Fund. Middle East and Central Asia Dept.

The development of domestic capital markets and non-bank financial institutions in Oman can offer benefits to investors and borrowers alike. Deeper capital markets and a more diversified investor base can improve risk sharing and the efficiency with which capital is allocated to the real economy, boosting economic growth and welfare. Despite recent government-led initiatives to improve investor access and encourage participation by local businesses, capital markets in Oman remain relatively small and illiquid and the investor base remains dominated by domestic banks and pension funds. This paper reviews the experiences of other emerging markets in developing local capital markets, and describes the challenges faced in the development of such markets. The review shows establishing a functioning money and local currency bond market remains a critical first step in successful capital markets' development, while several policy tools beyond tax incentives can be employed to support participation in local markets. Increasing the presence of life insurance companies and reducing information asymmetries would help spur demand from a broader set of institutional investors.

International Monetary Fund. Monetary and Capital Markets Department
The main objective of the FSSR diagnostic mission was to help the PNG authorities build a roadmap of technical assistance (TA) to address identified financial sector needs and gaps, with a view to strengthen resilience of financial institutions and to enhance the policy framework. The PNG FSSR diagnostic covered six areas: (i) macroprudential policy; (ii) regulation and supervision of banks and other deposit-taking financial institutions; (iii) regulation and supervision of insurance companies and pension funds; (iv) financial safety net and crisis preparedness framework; (v) financial market infrastructure; and (vi) financial sector statistics.
Carol C. Bertaut
,
Stephanie E. Curcuru
,
Ester Faia
, and
Pierre-Olivier Gourinchas
Peter Windsor
,
Suzette J Vogelsang
,
Christiaan Henning
,
Kerwin Martin
,
Elias Omondi
,
Gerardo Rubio
, and
Jooste Steynberg
International standards and best practice supports the implementation of a risk-based solvency regime in the regulation and supervision of insurers. Several emerging market and developing economies are transitioning to such a solvency regime or planning to do so. This paper discusses Kenya, Mexico, and South Africa’s journey to putting in place a risk-based solvency regime which had several common elements notwithstanding significantly different insurance sectors. The transition was a multi-year project requiring dedicated additional resources; restructuring of the regulator, including redesigning supervisory processes and tools and upgrading information technology systems; and significantly greater coordination between the regulator and the insurance industry.
Peter Windsor
,
Suzette J Vogelsang
,
Christiaan Henning
,
Kerwin Martin
,
Elias Omondi
,
Gerardo Rubio
, and
Jooste Steynberg

International standards and best practice supports the implementation of a risk-based solvency regime in the regulation and supervision of insurers. Several emerging market and developing economies are transitioning to such a solvency regime or planning to do so. This paper discusses Kenya, Mexico, and South Africa’s journey to putting in place a risk-based solvency regime which had several common elements notwithstanding significantly different insurance sectors. The transition was a multi-year project requiring dedicated additional resources; restructuring of the regulator, including redesigning supervisory processes and tools and upgrading information technology systems; and significantly greater coordination between the regulator and the insurance industry.