As Jamaica moves closer to formalising microinsurance legislation, the Insurance Association of Jamaica (IAJ) has voiced positive support for the initiative, lauding its potential to improve financial protection for low-income and underserved populations across the island.

Speaking at a recent Jamaica Observer Business Forum, industry leaders said that the formalisation of microinsurance will encourage more insurers to develop affordable, targeted products — broadening access through non-traditional distribution channels.

“Insurance companies will still underwrite the risk, but the category and range of distributors may be significantly widened. This presents a real opportunity to connect previously underserved segments to a larger network of channels—reaching individuals who would have not otherwise been exposed to insurance coverage. The hope is that overtime this will also help to address the issue of low insurance penetration locally,” said Everton McFarlane, executive director of the IAJ.

Microinsurance offers simplified insurance products designed for low-income individuals and micro-entrepreneurs. These policies provide protection against specific risks such as illness, death, property loss, or natural disasters. Priced at more affordable premiums, these products are often simpler, leaner, and tailored to meet the needs of underserved segments often overlooked by traditional insurance schemes.

Since 2012 the FSC has been working with international partners such as the Inter-American Development Bank (IDB), through an Access to Insurance Initiative (A2ii), to develop a local framework.

Through its latest efforts government is now actively seeking to amend the insurance legislation to allow the wider industry to offer microinsurance in Jamaica. This move aims not only to boost financial inclusion but also to reduce reliance on state welfare and public resources, particularly in times of crisis.

With the legislation expected to be tabled in Parliament in fiscal year 2025/26 and enacted by 2026/27, the Government is looking to promote more market-driven solutions to risk protection.

“Not every Jamaican can afford the premiums for traditional insurance sold here in Jamaica, so we have to meet the people where they are. The microinsurance legislation has been talked about; but I give my commitment that the legislation will be passed in this new fiscal year,” Minister of Finance Fayval Williams said in her maiden budget speech earlier this year.

Williams also said that Programme of Advancement Through Health and Education( PATH) families will gain access to microinsurance coverage once the law is enacted.

With the IAJ recently bemoaning the fact that many Jamaicans remain uninsured or underinsured, it believes that the formal roll-out of microinsurance products will help to bridge the coverage gap, offering affordable and accessible risk protection to the most vulnerable.

McFarlane during the forum also said that while no officially approved microinsurance products exist in the local market presently, some offerings already mirror microinsurance characteristics — having low premiums, simplified design and alternative distribution channels.

“Once the formal framework becomes available and the rules are made clearer, I expect to see broad participation from both general and life insurers,” he noted.

Chaluk Richards, vice-president with responsibility for the general insurance segment of the IAJ and general manager of GK Insurance Limited, also welcomed the initiative. He said that the framework would support efforts to improve financial literacy while expanding insurance coverage to more individuals.

Referencing GK Insurance’s Weather Protect parametric insurance product, Richards explained that the upcoming legislation will broaden the definition of microinsurance and facilitate its delivery at smaller, more accessible levels.

“Looking at items such as a cellphone, which many people spend a decent sum on — having solutions that allow individuals to insure just that item in case of loss or damage are exactly the kinds of mini safety nets we want to develop to help customers protect their overall asset base,” Richards said.

Indicating that traditional insurance packaging models may simply be too expensive for low-income clients, he said the implementation of a formal framework will help to get more cost-effective solutions to customers.

“Once the framework is in place, we believe there will be more persons engaging in microinsurance but at the moment the legal guidelines are needed for us to move forward,” he further noted while pointing to developments in markets such as South Africa where persons can now purchase a microinsurance card from the supermarket and activate it for immediate use.