Consumer Protection in Microinsurance: Poverty and Contracts

AuthorAndrea Camargo García
Pages447-487

Consumer Protection in Microinsurance:
Poverty and Contracts
Andrea Camargo García*
If I had my way I would write the word « Insure » over the
door of every cottage, and upon the blotting-book of every
public man, because I am convinced that by sacrices which
are inconceivably small, which are all within the power
of the very poorest man in regular work, families can be
secured against catastrophes which otherwise would smash
them up for ever.
Winston Spencer Churchill**
* is paper is a brief summary of Andrea Camargo’s PhD, which will be submitted in the winter of
2013 at the Paris Dauphine University. Andrea is a Colombian lawyer specialised in Insurance Law (Pon-
ticia Universidad Javeriana of Colombia), in International Economic Law (University Paris 1-Panthéon
Sorbonne) and International and European Business Law (Paris Dauphine University). After spending some
years as an associate of the department of International Arbitration in the oces of Paris and Rome at the
law rm Freshelds Bruckhaus Deringer, Andrea currently works as independent consultant on legal issues
in micronance, notably consumer protection and regulation. She has conducted multiple consultancies for
dierent agencies such as , the Inter-American Development Bank ––, the Inter-American Federa-
tion of Insurance Companies –– the  Foundation and the German agency for development,
. Some of the ndings of this paper can also be found in the paper “Protection of the microinsurance
consumer: confronting the impact of poverty on contractual relationships” published by the International
Labour Oce –– (available at: http://www.ilo.org/public/english/employment/mifacility/download/
repaper27.pdf) and in the study published by the  Foundation, the  and the : “Microse-
guros: Análisis de experiencias destacables en Latinoamérica y el Caribe”, which Andrea co-authored with
Luisa Fernanda Montoya. In this study Andrea lead the analysis of the regulatory framework applicable to
microinsurance in Brazil, Colombia, Guatemala, Mexico, Peru and Venezuela (available at: http://www.

** W. S. CHURCHILL, Discours “Land and Income taxes in the budget” (1909), in Liberalism and
the social problem: A collection of early speeches as a Member of Parliament, Arc. Manor, 2007, p. 146-147.
Derecho internacional: varias visiones, un maestro

Tout contrat est un piège en soi. Une peau de chagrin, à la
fatale tentation de laquelle on n’a pas su résister. Un piège
qui se referme sur le pauvre, l’acculé, le malheureux. Dans
un moment de faiblesse, il signe et voici qu’il est trop tard
(…) Ainsi les contrats seraient dangereux à cause, précisé-
ment, de cette liberté même qui fait leur dignité, qui est leur
raison d’être. On y perd inévitablement quelque chose : sa
fortune, son honneur, sa vie, ou même son âme. Le mythe
de Faust en est la consécration magistrale.
Dominique Terré-Fornacciari***
Introduction
1. e “poor”1 are especially vulnerable to risk. ey do not generally have
access to eective risk management strategies. is situation leads them
into a poverty trap2. Indeed, risk management is an essential element in
addressing vulnerability and poverty (especially given that vulnerability
perpetuates and accentuates “poverty” and “vice versa”3).
ere is evidence that insurance is an appropriate risk management
strategy as it confers more control to the poor over their lives and there-

p. 264.
1 In this paper we adopt the term “poor” instead of “low income population” or “low income house-
holds” as we consider that those terms restrict the multidimensional meaning of poverty, as they analyse
poverty only from the perspective of income.
2 e International Association of Insurance Supervisors –– describes it as: “Microinsurance is
insurance that is accessed by low-income population provided by a variety of dierent entities, but run in
accordance with generally accepted insurance practices (which should include the Insurance Core Prin-
ciples). Importantly this means that the risk insured under a microinsurance policy is managed based on
insurance principles and funded by premiums. e microinsurance activity itself should therefore fall within
the purview of the relevant domestic insurance regulator/supervisor or any other competent body under the
national laws of any jurisdiction”. , Issues in regulation and supervision of microinsurance, approved in
Basel on 31 May 2007, p.10.
3 ALBOUY, F-X. “L’assurance, cela sert d’abord à réduire la pauvreté”, in Revue Risques No.77,
March 2009; NARAYAN, D. PRITCHETT, L. and KAPPOR, S. Moving out of poverty: Success from
the bottom up, e World Bank, 2009; BANQUE MONDIALE, World Development Report ––:
Attacking poverty. New York, Oxford University Press, 2000, p.146.
Consumer Protection in Microinsurance: Poverty and Contracts

fore satises an essential element of leaving the poverty trap4. So could

In international law, the ght against poverty is translated in the reali-
sation of human rights, as the existence of poverty is considered as “a
negation of human rights”5.
Taking the alleged benets of microinsurance at face value, it could
be an appropriate tool to realise certain economic, social and cultural
rights, in particular, the right to social security, to have access to health
care services and to an adequate standard of living.
If so, the propagation of microinsurance could benet not only the
“poor” (by helping them to realise their human rights) but also States
(as the latter must full certain international, regional and national
obligations to respect, protect and ensure human rights6). In addition,
microinsurance could benet transnational corporations and other
business enterprises who participate in the microinsurance value chain
such as: insurers, reinsurers, and intermediaries, not only owing to the
prots that microinsurance can generate, but also because businesses
are seeing a level of institutionalisation which highlights the fact that
4 For example, on this point David ROODMAN notes that “(…) it is in the nature of nancial
services to give people more control over their nancial circumstances”, ROODMAN, D. Due Diligence-
An impertinent inquiry into micronance, Centre for Global Development, 2012, p. 177. COLLINS, D.
MORDUCH, J. RUTHERFORD, S. and RUTHVEN, O. Portfolios of the Poor –How the World’s Poor
Live on $2 a Day, Princeton, 2009. Regarding the relationship between the role of insurance to alleviate
poverty, see: ALBOUY, F-X. L’assurance, cela sert d’abord à réduire la pauvreté, in Revue Risques No.77,
March 2009; LIEDTKE, P. M., L’assurance et son rôle prépondérant dans les économies modernes, in Re-
vue Risques No.77, March 2009; MOSLEY, P. GARIKIPATI, S. HORRELL, S. JOHNSON, J. ROCK,
J. VERSCHOOR, A. Risk and underdevelopment: Risk management options and their signicance for
poverty reduction, Report to Department of International Development () (R.7614), Program on
Pro-Poor Growth, October, 2003, p. 110-124.
5 SOUS-COMMISSION DE LA PROMOTION ET DE LA PROTECTION DES DROITS DE
L’HOMME, CONSEIL DES DROITS DE L’HOMME DES NATIONS UNIES, Projet de principes
directeurs “Extrême pauvreté et droits de l’homme: les droits des pauvres”, in Résolution 2006/9, Application
des normes et critères relatifs aux droits de l’homme dans le contexte de la lutte contre l’extrême pauvreté,
adopted on 24 August 2006, A/HRC/Sub.1/58/36, 11 September 2006.
6 International Covenant on Civil and Political Rights, 16 December 1966; International Covenant
on Economic, Social and Political Rights, 16 December 1966. Human Rights Council, United Nations,
Resolution 17/4 of 6 July 2011 endorsing the “Guiding principles on business and human rights: Imple-
menting the United Nations ‘Protect, Respect and Remedy’ Framework”, of the UN Special Representative
John Ruggie, 21 March 2011.

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