Bancassurance in Nigeria: Getting it right

Globally, one of the most significant changes in the financial services sector over the past few years has been the appearance and development of bancassurance. Banking institutions and insurance companies have found bancassurance to be an attractive – and often profitable – complement to their existing activities. The successes demonstrated by various bancassurance operations have attracted the attention of the financial services regulators, and new operations continue to be set up regularly. Bancassurance is the provision of insurance services through the bank distribution network excluding risk underwriting by the bank whose channel is deployed to sale insurance products. Many countries in Africa have developed bancassurance operations to serve the growing needs of many financial services consumers. According to a recent report by Finaccord, banks in ten African countries in sub-Saharan Africa, namely Angola, Côte d’Ivoire, Ghana, Kenya,

Mozambique, Nigeria, South Africa, Tanzania, Uganda and Zambia are well-positioned to grow as an insurance distribution channel from the rapid increase in the value of the insurance markets.

A major tonic that encourages the practice of bancassurance all over the world, is the fact that banks are constantly looking for ways to supplement their core earnings, while insurers are also constantly looking for ways to increase their premium income and revenue. This naturally is a positive development for insurers as they see Bancassurance as a strategic distribution channel that will increase both their premium volume as well as insurance penetration especially in developing market.

In Nigeria, the Central Bank (CBN) released on March 16, 2015, the guidelines on Bancassurance in the country titled “Guidelines on Bancassurance- the Referral Model”. In the communication document signed by the CBN Director of Banking Supervision, the apex bank described the referral model as a system where 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 to be involved in marketing of the insurance products. There are other details of the provisions of the CBN guidelines on Bancassurance, which some marketing players in the insurance sector may not be comfortable with and we understand as no regulation anywhere in the world satisfies every need of market players. The good news is that many progressive financial services market players are celebrating the CBN for removing the restriction on Bancassurance business and replacing same

with a clear policy guidelines on Bancassurance to boost market activities in terms a well defined relationship between banks and insurers. Indeed this is a welcome development for the financial services system as Bancassurance has come alive in Nigeria.

In other to empower banks and insurers to get it right with Bancassurance through learning interventions, West Africa Business School, a regional training institution that is pioneering training courses in the area of Bancassurance in Sub-Saharan Africa is set to launch extensive and regular training on Bancassurance for Banks and Insurers to sustain best practice in this market. The first leg in series of this planned international annual training program titled ‘the Nigeria Bancassurance Masterclass ‘ is billed to hold 29th June – 1st July 2015.

Doug Sumner, lead discussant who is the lead facilitator,/presenter of the  the Nigeria Bancassurance Masterclass, he said that as new regulations are coming into force regarding banking and the sale of insurance, there is a major opportunity now for Nigerian Banks and Insurers who move quickly to seize the initiative. He commended the West African Business School for its initiative in hosting this Masterclass at such a key moment in the development of Bancassurance in Nigeria. Mr. Sumner said Bancassurance is (arguably) the most important distribution channel for insurance around the world. The opportunities are significant for those who ‘get it right’. Ngwuta is executive director of the West Africa Business School.

Obasi Ngwuta