The Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM) have disagreed on terms and conditions for the operation of bancassurance for the banking and insurance industry.
As a result, NAICOM has directed all insurance companies to stop transacting business on bancassurance where they pay Commission/fees to Banks for Insurance transactions, referral or introduction in any guise with the banks.
Th Commissioner for Insurance, Mohammed Kari made this known while speaking at the Insurance Distribution Channels at the investiture of Eddie Efekoha, as the 22nd Chairman of the Nigeria Insurers Assocaition (NIA), held yesterday at Eko Hotels & Suites, Victoria Island, Lagos.
Kari warned that insurance companies utilising, or intending to utilise any institution, including banks, airlines, online or web-based aggregators shall ensure that those institutions have been licensed by the Commission, as they have resolved to ensure strict compliance with the rules, adding that appropriate sanctions will be imposed on erring insurance institutions.
He stated that the Commission is making all efforts to libralise the channels of distribution.
He said: “This became necessary because distribution play a key role in the propagation and marketing of insurance products to the consumers. Licensing such channels is imperative to protecting the consumers and also to ensure ethical and orderly practice in protecting the credibility of the insurance sector which is the principal mandate of the Commission.
“However, the employment of such channels can only be utilised if that institution is licensed by the Commission in line with the provisions of the extant law. It is the licensing of those distribution channels that would authorise them to sell, distribute, refer or introduce insurance products through another licensed Insurance entity to their customers and earn a fee or commission.
“As you aware, the Commission has been in discussion with the Central Bank on the Bancassurance distribution channel for sometime now. But in a letter received last week, the CBN asserted that NAICOM is not in a position to licence Banks and thus we cannot go ahead with the arrangement for now. However, NAICOM would continue to engage the CBN until all the grey areas are resolved, Kari said.