The National Insurance Commission (NAICOM) has stated that insurance companies can only sell products and services through channels licensed by the commission.
It also stated that all previous and current relationships of underwriting firms with any financial institutions, telecommunication companies and airlines are no longer valid starting from August 17.
Speaking at the 22nd Investiture of the new Nigeria Insurance Association (NIA) Chairman, NAICOM Commissioner, Alhaji Muhammed Kari, ordered the 58 insurance companies in the country to cancel any form of channels used to sell their products and services except the ones licensed by the commission.
He warned that any insurer who went against the directive would be heavily sanctioned by the regulatory body
Henceforth, the Commission wants to license any agency and referral agents that are doing businesses and earning commission from the insurance industry
This development means that underwriting firms who are in partnership with telecommunication outfits, like Glo, MTN, Airtel Nigeria, and Etisalat on mobile insurance would terminate such transactions.
Furthermore, the commission threatened to sanction any firm who may ignore the order and continue to use financial institutions, telecommunication companies and airlines, as channels to sell their products and services, unless these distribution agencies are licensed by the commission to do so.
He stated that the commission had asked banks acting as agency or referrals of insurance firms to offer themselves for licensing by the commission, but got a letter from the Central Bank of Nigeria (CBN) last week, saying, NAICOM has no power to licence any institution within the purview of the CBN.
“Last week, we received a letter from CBN stating that NAICOM is not in a position to licence banks to do anything. And we feel referrals or any agency of insurance companies must be licenced. We cannot go ahead on bancassurance for now.
“We will continue to engage CBN on this to see the need to allow banks to enjoy referral option and earn commission from selling insurance products to their clients. However, as from today, all relationship of insurance companies with telecoms or banks on referral option is no more valid,” he said.
Adding that insurance companies utilising or intending to utilise any institutions including banks to sell its products shall ensure that those agencies have been licenced by the commission
“This directive is the requirement of the law and it affects airlines, telecommunications companies and financial institutions. Referral agencies must be licensed because that is the law.”
“We have only released a draft guideline for the banking industry on the Bancassurance which is the one that is generating rancour but we will resolve it with the cooperation of relevant stakeholders,” he stressed.