The National Insurance Commission (NAICOM) is putting finishing touches to bancassurance guidelines which will enable insurance firms to sell policies using microfinance banks in the country. Pius Agboola, a director in the commission’s inspectorate division disclosed this at an event in Lagos.
Some insurance firms have since sealed agreements. Old Mutual General Insurance Company as well as Old Mutual Nigeria Life Assurance Company, signed a Bancassurance partnership with Ecobank Nigeria to offer insurance products and services to existing and prospective customers in Nigeria.
AIICO Insurance Plc has concluded bancassurance arrangements with Wema Bank. Prudential also signed a bancassurance agreement with Zenith Bank.
Bancassurance is a partnership between a bank and an insurance company, aimed at offering insurance products or insurance benefits to a bank’s customers.
Benefits of bancassurance with microfinance banks
The move would enable the insurance firms to reach more customers, thus enhancing penetration which is quite poor as well as microinsurance coverage. A large proportion of low-income earners use microfinance banks in the country.
Consumers would also be more trusting of insurance products sold through microfinance banks they are familiar with.
There are currently 942 microfinance banks in the country, far outstripping the 57 insurance firms in the country. They would thus have a much larger network.
New wine in an old skin
Many Nigerians continue to be wary of insurance products, scarred by past experiences with firms that have failed to pay claims on time.