By Nike Popoola

As the era of universal banking comes to an end, the National Insurance Commission is set to reverse the bancassurance straategy, the Commissioner for Insurance, Mr. Fola Daniel, has said.

Under the bancassurance strategy, an insurance company uses banking halls in different parts of the country to market insurance products to bank customers.

This represents an edge in marketing of products to members of the public for the insurance companies involved over those that don’t have links to the banks.

“Having regard to the new banking structure as directed by the Central Bank of Nigeria, there is the need to rethink bancassurance strategy, the commission hereby advocates a model that will focus only on referrals and corporate agency,” Daniel said.

He noted that bancassurance was a veritable strategy for entrenching insurance culture in the country.

The commissioner, however, said that the abolition of universal banking threw up a number of questions relating to the practice of bancassurance.

Daniel said that the new bancasurrance strategy would take cognizance of the extent to which a bank might get involved in the marketing of insurance products.

The NAICOM boss, who identified some of the problems in the old synergy between banks and insurance companies, said that bancassurance would no longer be practiced in full scale.

According to him, it has led to abuse of consumers by banks that coerce them into buying insurance products against their will.

He observed that it also led to difficulties by the regulator to ensure transparency and disclosure on activities.

Other shortcomings, according to him, include the risk of double gearing, possibility of banks using long-term insurance funds to meet their liquidity and the problem of asset liability management.

Daniel also noted that there was the possibility of conflict of interests between regulators. “It had led to poor corporate governance as managing directors of insurance companies were reporting to senior managers in the banks, therefore having no say in the running of the insurance companies,” he said.

Source: Punch