09-462-36401 March 31, 2017 BSD/DIR/GEN/LAB/10/016 LETTER TO ALL BANKS REVISED GUIDELINES ON BANCASSURANCE REFERRAL MODEL In furtherance of our efforts to ensure that banks comply with the Regulation on the Scope of Banking Activities & Ancillary Matters, No. 3, 2010, the CBN hereby issues the Revised Guidelines on Bancassurance Referral Model to address developments both in the banking and insurance sectors. These Guidelines are a replacement to the one issued in March 2015. Banks are therefore required to ensure that their offering of bancassurance referral services is in line with the provisions of the Guidelines effective April 1, 2017.

Please be guided accordingly. Yours faithfully, AHMAD ABDULLAHI DIRECTOR OF BANKING SUPERVISION REVISED GUIDELINES ON BANCASSURANCE REFERRAL MODEL BANKING SUPERVISION DEPARTMENT CENTRAL BANK OF NIGERIA MARCH, 2017

Guidelines On Bancassurance Products - Referral Model

Outline 1.0 Introduction 2.0 Definition 3.0 Prohibited Business 4.0 Bancassurance Arrangement between Banks and Insurance Companies 5.0 Approval 6.0 Marketing of Bancassurance Products and Policy Documents 7.0 Premium Collection 8.0 Referral Commission 9.0 Claims Handling and Settlement 10.0 Consumer Protection Safeguards 11.0 Annual Disclosures 12.0 Sanction for Non-Compliance

1.0 Introduction

In 2010, the CBN Regulation on the Scope of Banking Activities and Ancillary Matters No. 3, 2010 was issued to repeal the Universal Banking Model, which hitherto permitted banks to engage in non-core banking financial activities either directly or indirectly through designated subsidiaries. In the light of developments and the need to ensure synergy in the financial system, the Central Bank of Nigeria (CBN) 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 Regulations No. 01, 2010 has considered it necessary to issue these guidelines on Bancassurance. The guidelines set out the regulatory framework for the offering of bancassurance products through the non-integrated referral model. The choice of this model is premised on the fact that it does not preclude banks from focusing on their core banking businesses and does not undermine the essence of the CBN's New Banking Model.

2.0 Definitions

Bancassurance - An arrangement in which insurance companies leverage on the customer base of banks to sell insurance products to banks' customers. Referral Model - In this model, a bank refers its customers to its partner insurance companies. In return, the bank receives a commission on each lead closed by the insurance company. The bank is not involved in marketing the products. Bancassurance Agreement - A contract duly executed between a bank and an insurance company to engage in the referral model of bancassurance. Bancassurance Products - Insurance products which fall under the General and Life insurance business that would be sold to banks' customers by the insurance company under a bancassurance referral model agreement. The product is distinct from insurance covers that serve as mitigants for losses against credit and other risks. Commission - Referral fee payable to the bank by the insurance company in line with the provisions of the Bancassurance Agreement.

3.0 Prohibited Business

1. Banks shall not engage in any other model of bancassurance other than that permitted under these guidelines and for which approval has been obtained from the CBN.

2. Banks shall not offer banking products that incorporate insurance features. 3. Banks shall not offer free premium payments as a feature of any of their products.

3. Banks shall not provide the bancassurance referral service in a manner that contravenes this guidelines.

4.0 Bancassurance Arrangement Between Banks And Insurance Companies

1. The referral model of bancassurance arrangement between a bank and an insurance company shall not be valid without an executed Bancassurance Agreement.

2. Banks shall not undertake any insurance marketing, underwriting or claim settlement. This must be clearly stated in the Bancassurance Agreement.

3. Banks shall ensure that no risks are transferred to it and shall not assume any fiduciary responsibility or liability for any consequences, financial or otherwise, arising from the subscription to insurance policies by their customers under the Bancassurance Referral Model.

4. Banks shall conduct a thorough due diligence/periodic assessment for the selection of partner insurance companies, which would be restricted to two insurance companies.

5. Banks shall ensure that only insurance products approved by NAICOM are offered by their partner insurance companies to their customers.

6 Banks shall not enter into bancassurance agreement with insurance companies who do not hold a valid operational license from National Insurance Commission (NAICOM).

5.0 Approval

The offering of bancassurance referral services by a bank is subject to the CBN's approval. A bank that intends to offer bancassurance referral services is required to submit the following alongside its application:

1. Extract of Board resolution approving the service. 2. The Bancassurance Agreement between the bank and the insurance company, which should at the minimum set out: a. The bancassurance products to be offered by the insurance company; b. The duties and responsibilities of each of the parties under the arrangement during and upon termination of the contract; c. The conditions for the termination of the agreement; d. The commission to be charged for the referral services should be as approved by NAICOM; e. The duration of the contract and whether it is renewable; f. Dispute resolution mechanism and measures to safeguard confidential information; g. Disclaimer that the products shall be underwritten by the insurance company with no recourse to the bank in terms of claims or any legal proceedings between the insurance company and the bank's customer; and h. Other relevant information.

2. The bank's assessment of risks and mitigants put in place.

Upon approval, the bank shall forward the signed copy of the bancassurance agreement to the CBN. Upon expiration, banks shall notify the CBN of the renewal of the bancassurance agreement. Any amendment to the bancassurance agreement shall be subject to the approval of the CBN. Upon the termination of the agreement, the bank shall notify the CBN stating the reason(s) for the termination.

6.0 Marketing Of Bancassurance Products And Policy Documents

1. Banks shall only refer their customers to insurance companies. Thus, marketing of the insurance products shall be done by the staff of the insurance companies.

2. The referral document shall contain a disclaimer that the products shall be underwritten by the insurance company with no recourse to the bank in terms of claims or any legal proceedings between the insurance company and the bank's customer.

3. The insurance products to be sold shall be strictly the products of the insurance company.

4. The bank's name or logo shall not appear in any of the policy documents. 5. The insurance marketers may be allowed to occupy a space in the banking hall of the bank.

5. Banks shall maintain adequate records of all transactions which will be reviewed during supervisory activities.

7.0 Premium Collection

1. The premium paid by the customer may be paid into the insurance company's account in the bank; if the bank is a banker to the insurance company under a customer/banker relationship and with a valid instruction from the customer.

8.0 Referral Commission

1. Insurance companies shall pay to the banks all agreed commission(s) on consummated transactions as approved by NAICOM.

2. The applicable commission(s) shall be clearly stated in the Bancassurance Agreement.

9.0 Claims Handling And Settlement

1. Banks shall not be responsible for claims handling and settlement as these are the responsibilities of the insurance companies.

2. The insurance companies shall be solely responsible for the collection of necessary documents and information related to claims.

10.0 Consumer Protection Safeguards 1. The referral shall be based on the need of the customers as assessed by the banks and would be advisory in nature. This shall be made known to the customer.

2. Banks are prohibited from influencing or compelling customers in any way to take up insurance products from insurance companies they have bancassurance referral agreement with.

3. Banks shall not charge their customers service fee, processing fee, administration charge or any other fee for the referral.

4. Banks shall ensure the confidentiality of consumer data and information. 5. Banks shall ensure that the insurance company has in place an appropriate complaints redress mechanism.

11.0 Annual Disclosure

Banks shall disclose in the notes to the annual financial statements referral commission earned from bancassurance services.

12.0 Sanction For Non-Compliance

Banks should ensure compliance with these guidelines as any breach of the Guidelines shall attract sanctions in accordance with Section 64(1) of the BOFIA 2004. In addition, the bank may be prohibited from offering bancassurance referral services. BANKING SUPERVISION DEPARTMENT CENTRAL BANK OF NIGERIA MARCH, 2017