Regulatory Alerts2017-03-31 | BSD/DIR/GEN/LAB/10/016Revised Guidelines on Bancassurance Referral Model
This article outlines the guidelines for banks offering bancassurance referral services in Nigeria. Here is a concise summary of the main points: 1. Banks must obtain approval from the Central Bank of Nigeria (CBN) before offering such services. 2. Banks shall not offer banking products that incorporate insurance features, nor can they provide free premium payments as part of any product. 3. A bancassurance agreement between the bank and an insurance company is required and must be clearly stated in the agreement that no risks are transferred to the bank and it assumes no fiduciary responsibility or liability for claims or disputes. 4. Banks shall conduct a thorough due diligence/periodic assessment for partnering with an insurance company, limited to two companies at any time. 5. Insurance products offered through bancassurance referral services must be approved by the National Insurance Commission (NAICOM). 6. Marketing of the insurance products is to be done exclusively by the insurance company's staff and the bank's name or logo shall not appear in any policy documents. 7. Premiums paid for these insurance policies are to be paid directly into the insurance company's account, with the commission payable to the banks being clearly stated in the bancassurance agreement. 8. The handling and settlement of claims is the responsibility of the insurance companies, not the banks. 9. Consumer protection safeguards such as data confidentiality, non-influencing customer decisions regarding insurance products, no additional fees for referrals, and appropriate complaint redress mechanisms must be ensured by the banks. 10. Banks are required to disclose in their annual financial statements the referral commission earned from bancassurance services. 11. Non-compliance with these guidelines may result in sanctions under Section 64(1) of the BOFIA 2004, and a prohibition on offering such referral services.