Guidelines for the Application of Approval to be a Bancassurance Provider in Malawi

DECEMBER 19 1 REGISTRAR OF FINANCIAL INSTITUTIONS GUIDELINES FOR THE APPLICATION OF APPROVAL TO BE A BANCASSURANCE PROVIDER IN MALAWI (Financial Services Act and Insurance Act) FINANCIAL SECTOR REGULATION DEPARTMENT

DECEMBER 19 2 PART I - PRELIMINARY 1.0 INTRODUCTION The Registrar of Financial Institutions (‘the Registrar”) is responsible for licensing and regulation of insurance brokers. In line with the provisions of the Financial Services Act, 2010 and the Insurance Act 2010, the Registrar has issued these Guidelines to facilitate approval to operate as a bancassurance provider. The Guidelines are intended to provide guidance on the criteria for bancassurance provider’s approval. These Guidelines should be read in conjunction with the provisions of the Financial Services Act 2010, the Insurance Act 2010, and any subsidiary legislation made under the Acts. 2.0 DEFINITIONS In these Guidelines, unless the context otherwise requires: - “Applicant” means an applicant for approval to be a bancassurance provider under these Guidelines; “Bancassurance provider” means an arrangement in which an insurance company leverages on the customer base of a bank to sell insurance products to the bank’s customers; “Bancassurance agreement” means a contract duly executed between a bank and an insurance company to engage in bancassurance business; “Registrar” means the Registrar of Financial Institutions appointed under the Financial Services Act, 2010; PART II: APPLICATION PROCEDURES 1.0 An application for approval to be a bancassurance provider shall be made by completing the application form provided in Appendix I.

DECEMBER 19 3 2.0 An applicant should not leave any requirements blank or unanswered. If a response to any requirement is ‘no’, ‘none’, ‘not applicable’ or ‘not known’ it must be so stated and an explanation provided, where necessary. 3.0 The application must be supported by information outlined in Part IV. An application which does not contain all the information as required in Part IV shall be deemed incomplete and will not be processed. 4.0 The Registrar may, in his discretion, require further information to support processing of the application. 5.0 An application shall be accompanied by a non-refundable assessment fee of Five Hundred Thousand Kwacha only (K500, 000.00) payable to the Reserve Bank of Malawi. 6.0 The application must be duly signed by the applicant(s) and must provide details of a contact person formally designated by the applicant(s) to act on its behalf on matters connected to the application. All communication between the Registrar and the applicant(s) will be conducted through the contact person provided. 7.0 The application must be submitted to the following address: - The Registrar of Financial Institutions Reserve Bank of Malawi P O Box 30063 Capital City LILONGWE 3 PART III: AUTHORISATION REQUIREMENTS 1.0 An applicant to be a bancassurance provider shall be a licensed bank.

2.0 The application for authorisation should be accompanied by a business plan which should include a three-year financial projection of premium generation, commission income and related expenses. 3.0 The applicant must have a designate officer who must be appointed as a principal officer. The principal officer must be a chartered insurer or must have an equivalent professional insurance qualification recognized by the Insurance Institute of Malawi and acceptable to the Registrar.

DECEMBER 19 4 4.0 The applicant shall be required to submit a bancassurance agreement with an insurer. At a minimum, the agreement shall include the following: - 4.1 bancassurance products to be offered; 4.2 commission and fees to be charged; 4.3 a declaration that the bank shall not undertake any insurance marketing, underwriting or claim settlement; 4.4duties and responsibilities of each of the parties under the arrangement during and upon termination of the contract; 4.5 conditions for the termination of the agreement; 4.6 duration of the contract; 4.7 dispute resolution mechanism and measures to safeguard confidential information. PART IV: OTHER REQUIREMENTS 1.0 The applicant must ensure that borrowers or clients of banks are not compelled to use bancassurance unless satisfied that the product offered meets their insurance needs. 2.0 The applicant must ensure that borrowers or clients of banks have the right to retain their brokers or insurers or select their preferred insurer or broker to provide cover on their loans or assets financed by a bank, unless the bank facility being sought is a specifically bancassurance packaged product. 3.0 A bank shall not undertake or engage in the actual business of underwriting of risks, or engaging in any other insurance business not authorised by the Registrar. 4.0 A bank shall not give the impression to its customers or imply in any way as to being the actual insurance underwriter of the insurance products and services other than selling or marketing on behalf of the insurers. For the avoidance of doubt, in the case of distribution or marketing of any insurance product, the bank shall ensure that the product is in the name of the underwriter and shall make known to the customers that the insurer will wholly be liable for payment of claims that may arise from the risk covered.

DECEMBER 19 5 5.0 A bank shall not provide the bancassurance products in a manner that contravenes these Guidelines or any other statutory provision or law that applies to insurance business. PART V: APPROVAL PROCESS For purposes of the authorization application, an applicant must submit the following: - (i) Bancassuarance agreement; (ii) Copy of the banking licence; (iii) Business plan; (iv) Copy of the bio-data/ résumé of the bancassurance principal officer; (v) Certified true copies of educational and professional certificates for the principal officer; (vi) Non-refundable application assessment fee of Five Hundred Thousand Kwacha only (K500, 000.00). ENQUIRIES Enquiries concerning the preparation, submission and status of an application should be addressed to: - The Director Financial Sector Regulation Department Reserve Bank of Malawi P O Box 565 BLANTYRE E-mail: fsr@rbm.mw The authorization requirements, other guidelines and relevant forms can be downloaded from the Reserve Bank of Malawi’s website: http://www.rbm.mw

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DECEMBER 19 7 APPENDIX I APPLICATION FORM

1. Name of the applicant:

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2. Mailing address:

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3. Phone no(s): Fax no: E-mail:

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4. Location of head office

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5. Principal officer: i. Name of individual designated as principal officer. ii. Provide details regarding his/her professional and educational qualification. iii. Provide details regarding his/her employment history, including positions held and level of managerial experience.

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DECEMBER 19 8 DECLARATION With regard to APPLICATION FOR AUTHORISATION TO CONDUCT BUSINESS AS BANCASSURANCE PROVIDER We, the undersigned, do hereby certify that: i) all the information given in response to and in support of the questions in this application is true and correct to the best of our knowledge and belief; and ii) this application is made in good faith with the purpose and intent that affairs and business of the proposed bancassurance business will at all times be honestly conducted in accordance with good and sound business principles and in full compliance with all applicable laws and regulations. We further certify that to the best of our knowledge and belief there are no other facts or information relevant to this application of which the Registrar should be aware, and we pledge to promptly inform the Registrar of any material change to this application which may arise while it is being considered. NAME SIGNATURE TITLE/POSITION Date:……………………………..