By Ebere Nwoji
The insurance industry regulatory authority, the National Insurance Commission ( NAICOM) has introduced new channels of distribution for the industry sector.
This is coming barely four months after the commission banned the use of alternative distribution channels in the sale of insurance products.
Prior to the ban, insurance industry operators, in addition to the use of insurance brokers as traditional distribution channels, have been partnering the banks through Bancassurance, and mobile telephone network operators in the sale of their products.
But the commission, at the weekend, announced that it has created new distribution agencies tagged: “Referral Partners/Agents” for distribution of insurance products in the country.
According to the commission, the channels will see the commssion integrating and involving many organisations to be partners/agents of insurance companies in the distribution of insurance products across the country.
“To this end, the commission has created new distribution agencies to be known as “Referral Partners/Agents”. These channels will entail integrating and involving many organisations to be partners/agents of insurance companies in the distribution of insurance products across the country”, said the commission.
In a statement made available to THSDAY, Head, Corporate Affairs of NAICOM, Rasaaq Salami, said the initiative is expected to create opportunities for individuals and regulated corporate entities to play a vital role in the insurance distribution chain to access and reach the largely underserved majority of the Nigerian population without being exposed to any liability.
According to him, the draft guidelines to ensure seamless operation of the initiative are ready for exposure after which it will be issued as an operational guideline.
He said the commission will meet with relevant regulatory agencies and professional bodies to discuss the modus operandi and benefits inherent in the new initiative.
Speaking on the need for the new channels ,salami said: “Inadequate insurance distribution channels has been roundly identified as one of the major challenges of deepening insurance penetration in the country and the commission believes that expanding the channels of distribution will go a long way in bridging the gap of insurance awareness and penetration in Nigeria.”
He said when implemented, the new initiative will not only achieve the desired increase in insurance penetration, but would contribute to the federal government’s drive to create employment and wealth in the economy.
NAICOM had few months ago suspended all financial activities concerning bancassurance and use of channel partners in insurance product distribution by insurance operators insisting that henceforth every insurance product distribution channel must be licenced by the commission.
The decision on insurance product distribution channel might not be unconnected with the controversy between the commission and the Central Bank of Nigeria( CBN) in which according to the Commissioner for Insurance, Mohammed Kari, the apex bank wrote the commission saying it could not allow the commission to licence financial institutions in the country especially banks for any reason.
Against this backdrop, Kari said laws guiding insurance industry did not allow any body or institution to operate or earn commission from the industry without being licenced by the commission.
“If we don’t license them, our law forbids anybody to earn commission from insurance company and it makes it illegal for licenced insurance companies to deal with anybody who is not licenced and as insurance companies are licenced by us, it is them we will go after, if they infringe in the law, we will deal with them. We have always allowed it because we want to deepen insurance penetration and at the same time, we are trying to bring out rules and regulation. They must be done within rules and regulation but that has failed. So we cannot allow it,” Kari insisted.