By Rosemary Onuoha

NATIONAL Insurance Commission (NAICOM) has placed a two year limit on bancassurance partnerships between insurance companies and banks.

The regulator also pegged the referral commission to be paid by the insurer to a referral bank at 40 percent of the insurance brokers’ commission.

NAICOM

These were contained in the bancassurance guideline recently released by the NAICOM.

Titled, ‘Bancassurance Referral Operational Guideline’ the guideline stated: “An approval once issued to the insurer shall be valid for a period of two calendar years from the date of its issue, unless the same is suspended or cancelled pursuant to the extant law.

“The referral commission to be paid by the insurer to referral bank shall not exceed 40 per cent of the commission allowed in the Insurance Act, 2003 for insurance brokers. The insurer partnering with a bank shall open and maintain a dedicated premium account with the referral bank and any other bank of its choice.”

NAICOM was compelled to review the bancassurance guideline after a number of insurance companies entered into partnership with banks for more than 10 years without NAICOM’s approval. Some companies even gave out as much as 70 percent of the premium as commission to the banks, which led to the suspension of all bancassurance agreements in 2016.

Commissioner for Insurance, Alhaji Mohammed Kari, while suspending previous arrangements at the investiture of Eddie Efekoha as Chairman of Nigerian Insurers Association in Lagos, said, “All relationships the Commission had hitherto accommodated, where insurance companies pay commission/fees to banks for insurance transactions, referral or introduction, in any guise is no more valid.

“NAICOM discovered that an insurance company had signed a 12-year partnership agreement with a bank, when it is supposed to be renewable every two years. This is wrong. “We also noticed that an insurance company had paid commission in advance to one of the banks, and this is abnormal.”