Assurance et réassurance
In certain developing markets, insurance and bank products have been sold together for many years without there being specific legislation to govern the conduct of banks that sell insurance products. In this month's legal update we review the new Insurance (Bancassurance) Regulations (the Regulations) which were published on 15 March 2019.
Within the East Africa region, we have recently seen Kenya adopt rules that would regulate Kenyan banks offering insurance products, which were previously regulated as insurance brokers instead of bancassurance agents or operators.
In Tanzania specifically, banks have been able to sell insurance products through their insurance broking licences, and they may continue to do so for a period of not more than 2 years from the commencement date of the Regulations.
Whilst there may be a number of insurers in the Tanzanian insurance market, there is still room for the insurance sector to grow, and it is anticipated that with the inclusion of banks and financial institutions in bancassurance business, the Tanzanian insurance sector will likely expand and become a key investment sector for the economy.
Insurers and bancassurance agents shall participate in public awareness campaigns to develop bancassurance business.
Some additional points to note regarding the Regulations are that the insurers require TIRA approval before offering the relevant bancassurance product; and bancassurance agents can only sell the products as they do not have any room to develop or package a bancassurance product without involving the insurer specified in the bancassurance agency agreement.
In the spirit of consumer protection, bancassurance agents are prohibited from engaging in the practice of tied-selling, i.e. where a customer must purchase an insurance product if a bank product is purchased or vice versa.
Bancassurance agents have a number of reporting obligations and also may be visited for inspection by TIRA.
Bancassurance agents have to maintain detailed records including names of policy holders, products and services offered by that agent, value of the insured matter, premiums charged etc. All such information has to be stored at a specified office of the bancassurance agent and such records shall be available for inspection by TIRA officers.
TIRA may inspect the bancassurance agent’s records to ascertain compliance with the Insurance Act, the Regulations and other laws. What is interesting to note is that TIRA’s power of inspection may be used with or without notice if the circumstances justify the inspection; but also that the power of inspection is not specifically limited to bancassurance product records. This gives TIRA a wide ambit to step in and review the actions of bancassurance agents which may include banking or finance related business, although it is likely that their interest will relate to the bancassurance business only.
As these widely anticipated Regulations have finally been released to the public it will likely be some time before we see the fruits of this niche market – it will certainly be interesting to see the overlap between banking and insurance business. Insurance companies may benefit since they could gain new clients without having to spend a significant amount more to market their products, while the banking sector may benefit as it increases the number of customers and also creates somewhat risk-free income.
We hope this information has been useful. Should you require further information, please do not hesitate to contact us.
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