UNDP and MMA to develop the insurance market

When disaster strikes, the aftermath can be worse for several individuals as they are left with nothing, solely having to wait for the Government to provide help as they have no insurance coverage to help recover the losses of a natural disaster



When someone brings up the word insurance, to many Maldivians the only thing that comes to mind might be Aasandha -  for a good reason. Many grow up hearing about the word insurance, knowing Aasandha exists for all Maldivians thinking that that is what insurance must be.

And while Aasandha is surely a form of health insurance that is provided by the Government of Maldives for all the local citizens, this form of insurance is only accessible through Government hospitals, making it extremely hard in times of urgency. And while it is better than having no form of insurance at all, the only other time most Maldivians hear of insurance is when it comes to insuring their moto-bikes or cars. 

This is largely due to most citizens being unaware of the several types of insurance that are available such as insuring yourself against natural disasters and life insurance among many others as well as the lack of insurance schemes other than health insurance available in the Maldives.

As a low-lying nation, insuring oneself against disasters is highly important for every single Maldivian citizen. If we learnt anything from past natural disasters, it is that people lose their homes, their personal properties and their jobs due to the negative effects of natural disasters.

When disaster strikes, the aftermath can be worse for several individuals as they are left with nothing, solely having to wait for the Government to provide help as they have no insurance coverage to help recover the losses of a natural disaster. 

“Less than 5% of losses due to disasters are covered by insurance in the Maldives, as compared to a 50% in high-income countries, meaning that when disaster strikes, people lose their homes, jobs, food sources, and face increased expenses such as in healthcare. There is no compensation and no chance to rebuild their lives. Closing this “protection gap” would help ensure that hard-won progress is truly sustainable in the long run,” 
Enrico Gaveglia, UNDP Maldives Resident Representative.

This is one of many examples that go to show how little Maldivian citizens are insured against losses. While we might have Aasandha covering a chunk of our medical expenses, we have little to no insurance against things such as natural disasters that could easily disrupt our lives.

Signing of the letters of intent

UNDP and MMA signed a letter of intent to explore the various ways they can collaborate and develop detailed proposals to design follow-up insurance interventions based on the findings and results of the Insurance Sector Diagnostic Study.

Signed on September 29, 2022, the letter of intent was signed in order to create more opportunities for both parties so that follow-up insurance interventions based on the findings of the insurance sector diagnostic study could be developed.

“The MMA is committed to realizing its obligation to strengthen policies and governance mechanisms to accelerate resilience building in the country. MMA will continue to work together and deliver a stronger, more sustainable future” 
Ali Hashim - Governor, MMA 

This was the second letter of intent signed between both parties in an effort to show the commitment they have towards developing the insurance sector of the Maldives. On May 11, 2022, the first letter of intent for the insurance diagnostic study collaboration was signed. 

The outcome of this letter of intent was the creation of a comprehensive insurance sector diagnostic report which contained critical information such as insights gathered from insurers, government, and private sector entities.

Risk assessment diagnostic study and follow up validation session

In order to resolve and assess the issues surrounding insurance coverage available in the Maldives, as well as highlight areas where the Maldives Monetary Authority (MMA) and the United Nations Development Program (UNDP) can create an environment for a more inclusive insurance and risk financing, a ‘risk insurance and diagnostic study’ consultation was hosted on July2022.

The main focuses of the workshop included:

  •  assessing the development of the insurance agenda in the Maldives.
  • assessing the disaster and climate risk insurance development needs and priorities.
  • facilitating the stakeholders’ dialogue 
  • developing an action plan based on the findings. 

Following the risk insurance and diagnostic study in July 2022, a validation session was hosted by both parties in September 2022 in order to analyse how inclusive insurance products can be established among different sectors such as tourism, agriculture and fisheries. 

Sectors such as agriculture and fishing come with a lot of natural disaster risks, which most people working in those sectors are not insured against. If a natural disaster, such as a tsunami, destroys farmland, farmers are forced to start over with their own money as a result of the property not being insured against the damages. 

Therefore, hosting these sessions and identifying gaps in the insurance market can aid in the development of the national insurance market of the Maldives which can develop a better and safer future, especially for those who work in high-risk environments.

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