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NAICOM spells out guidelines for bancassurance operations


NAICOM Building

Before any of the 58 insurance companies operating in the country, would be allowed to sell insurance products in banks through Bancassurance Referral Distribution Model, they would have to pay licensing fees of between N500,000 and N2.5 million.

This assertion was made by the National Insurance Commission (NAICOM), at the maiden Bancassurance Certification training held at the College of Insurance and Financial Management (CIFM).

Bancassurance is the collaboration between a bank and an insurance company to market insurance products to the customers of the bank.Speaking on the guidelines by the Commission and the Central Bank of Nigeria (CBN), the Commissioner for Insurance, Mohammed Kari, represented by the Director, Authorisation and Policy, Pius Agboola, also said the insurance companies would further pay renewal fees of N1 million.


The Commissioner, however, said that training on bancassurance mandatory course for 12 and 18 hours is binding on employees of an insurance company that aims to act as bancassurance managers or desk officers.

He explained that the training is aimed at equipping the operators of the bancassurance scheme with the requisite knowledge needed for seamless bancassurance operations, adding that it will ensure that those representing the partner insurer were competent.

He maintained that the Commission believes in the ability of the CIFMS to give competent training and certification that would be sufficient for any employee occupying this position alongside other qualifications stated in the guidelines.

Kari explained to participants that Bancassurance referral service shall be by referring to the insurer, a bank customer that requires insurance services and products.
This could also be done by locating a Bancassurance Desk in the banking hall of the Referral Bank, in which the insurer shall maintain a Bancassurance relation with not more than two referral banks at any one time and vice versa.

On restrictions and conducts, he noted that the insurer approved to partner with a referral bank shall not engage the referral bank in any form of marketing, sales or services other than referral only.

He said: “The insurer shall make known to the customers so referred that the insurer will wholly be liable for underwriting of the risks, assessment, adjustment and payment of claims that may arise from the risk covered. It will not use any advertisement or promotion that would make people to mistakenly believe that the Referral Bank stands behind or guarantees any return on the Insurance Products. It will not pay compensation to any individual for the referral of a customer where such a person is not an approved referral bank. It will not fail to disclose in writing to the Customer that the insurance policy to be sold is not a cash deposit; not insured by the Nigeria Deposit Insurance Company (NDIC) and not guaranteed by the CBN.

“The insurer shall not enter into a referral arrangement with more than two referral bank; not fail to keep distinct and separate, the records relating to Bancassurance transactions, and such records are to be made available to NAICOM as and when required. It shall not make any payment to the referral bank by whatever name called (fees, charges, etc.) over and above the approved referral Commission. It shall not pay fees or commission for the insurance of a policyholder that is not a referral client on the referral client list maintained in the insurer records.


“Other restrictions include that the insurer shall ensure that all prospective clients are allowed to decide out of their own volition, which insurance product they wish to buy and from which insurance company. It shall not fail to open and maintain a dedicated premium/operational account for the purpose of capturing bancassurance (referral) transactions; maintain a standstill period of one year for an account/business that has an existing intermediary before a change to Bancassurance referral is upheld.”

The Rector, CIFM, Dr. Yeside Otetayo said the College has been appointed as the certifying body of the principal officers in the Bancassurance business.“The Commission has confidence in the college knowing that it has the capacity to certify and develop human capital within that segment of the market.

“At the end of each workshop, we are going to have an assessment so it is not an automatic certification taken workshop. After the end of the sessions, we will have an assessment to judge the knowledge of the participants as regards what they have learnt from the workshop. It is after they have passed that assessment that we issue them a certificate.”


In this article:
Mohammed KariNAICOM
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