BY JOHN HOUANIHAU
The Central Bank of Solomon Islands (CBSI) is undertaking a review of its Insurance Act to accommodate emerging insurance solutions such as parametric insurance and micro-insurance.
Speaking at the recent Parametric Insurance Workshop for Climate Resilience in Honiara, CBSI’s Steve Awao outlined the bank’s goals for the review. He explained that the initiative aims to clearly define critical components such as parametric triggers and payouts, ensuring these innovative insurance products are explicitly recognised within the legal framework.
“In support of this development, CBSI has also facilitated an exemption from stamp duty for all micro-insurance products, reaffirming our commitment to fostering growth in this sector,” Awao said.
He further highlighted CBSI’s establishment of a regulatory sandbox—a controlled environment where insurers can pilot new and cost-effective parametric products without being subject to full regulatory compliance during testing. This platform is designed to encourage innovation while carefully managing financial risks.
“While parametric insurance offers promising solutions, it also carries inherent risks. As the regulator, CBSI remains committed to ensuring a balance between innovation and risk mitigation. Insurers will be required to maintain strong capitalization, implement reinsurance programs, and provide transparency in policy details to protect consumer trust and confidence,” Awao added.
CBSI’s efforts are closely aligned with the National Financial Inclusion Strategy (NFIS) Three, particularly its fourth objective of enabling economic resilience. The National Financial Inclusion Unit (NFIU) plays a key role in promoting awareness and affordability of parametric insurance.
“The CBSI is working to educate stakeholders and the public to ensure that parametric insurance is accessible, affordable, and well-understood. This education is crucial to making these innovative solutions widely available, contributing to economic resilience across the Solomon Islands,” Awao said.
CBSI has also partnered with key stakeholders to strengthen cross-sector collaboration, emphasizing the importance of partnerships in driving financial inclusion and educating the public about these innovative insurance solutions.
