Underwriters seal pact with MFBs to drive insurance policy uptake
Insurance companies will soon be allowed to partner Microfinance Banks on the Bancassurance arrangement in a bid to deepen insurance penetration in the country.
To this end, the industry regulator, the National Insurance Commission (NAICOM), is putting measures in place to ensure that underwriting firms across the sector can now sell insurance products and services through their choice Microfinance Banks.
Bancassurance means selling insurance products through banks, as banks and insurance companies come up in a partnership wherein the bank sells the tied insurance company’s insurance products to its clients.
Speaking at the Risk Frontiers West Africa Conference in Lagos, the Director, Inspectorate, NAICOM, Pius Agboola said, while Bancassurance partnership with conventional banks has started, that of microfinance banks is in progress, adding that, there are ongoing collaborations and engagement of the informal sector by the operators and regulators, in a bid to formalise the informal sector.
Such move, he said, involves Microfinance Institutions (MFIs), NGOs, Co-operatives, among others who are to act as channels of distribution of insurance products and services. ‘The importance of collaboration towards reducing insurance gaps in developing nations cannot be over-emphasized,” he stressed.
According to the operators, when the initiative with MfBs kicks-off, insurers would be able to persuade the informal sector into buying their products in the Microfinance banking halls.
While Bancassurance arrangement has commenced between insurers and conventional banks, such arrangement is yet to allow MFBs partake in this process, until the insurance regulator finalise its review of the Bancassurance guideline to include micro banks.
Already, Old Mutual General Insurance Company as well as Old Mutual Nigeria Life Assurance Company, has sealed a Bancassurance partnership with Ecobank Nigeria to offer insurance products and services to existing and prospective customers in Nigeria, while AIICO Insurance Plc has concluded bancassurance arrangements with Wema Bank to increase access to retail insurance products leveraging on the bank’s robust and efficient retail distribution network.
Few insurance companies are also in the process of sealing Bancassurance arrangement with some conventional banks, expecting regulatory approval from NAICOM before being able to do so.
The banks, on the other hand, are awaiting approval from the Central Bank of Nigeria(CBN).