Central Bank of Nigeria (CBN), has issued a new set of guidelines for banks providing bancassurance, mandating them to conduct thorough due diligence/ periodic assessment on selection of insurance partners, which must hold valid operational license from National Insurance Commission (NAICOM).
The directive in a circular to banks and signed by Director of Banking Supervision, Mrs. Tokunbo Martins, said it was part of its measures to effectively regulate transactions on General and Life Insurance among banks. The apex bank, specified that banks shall not engage in any other model of bancassurance other than that allowed under these guidelines and for which approval has been obtained from CBN.
However, the apex bank stated that the guidelines were issued based on recent developments and the need to ensure synergy in the financial system in exercise of its power under Section 33(1) (b) of the CBN Act 2007 and the provision of Part 2, Section 3, Item (l) of the CBN Scope, Conditions & Minimum Standards for Commercial Banks Regulate CBN Scope, Conditions No. 01, 2010.
It set out the regulatory framework for the offering of bancassurance products through the non-integrated referral model. The choice of this model, according to CBN, was premised on the fact that it does not preclude banks from focusing on their core bank ing businesses and does not undermine the essence of CBN’s New Banking Model Bancassurance products.
Under the guidelines, the apex bank directed banks to enter into agreements with insurance companies, but should not engage in any other model of bancassurance other than that permitted under these guidelines and for which approval has been obtained from it. It stat ed that banks should not of fer banking products that in corporate insurance features.
In addition, they were also prohibited from offering free premium payments as a feature of any of their products as well as providing the bancassurance products in a manner that contravenes the new guidelines or any other statutory provision or law that applies to insurance products and services.