Bank of Ghana issues new Bancassurance Directive

Preamble

Bancassurance has notably grown in Africa and around the world since the 1980s by offering banks and other financial institutions (BOFIs) an opportunity to provide more diversified products to their customers, whilst earning additional income by providing their distribution channels and other platforms to insurance companies. Insurance companies, on the other hand, can have an increased reach to a broader audience and achieve more sales by leveraging the BOFIs’ distribution channels. For customers, there is convenience, as BOFIs provide a one-stop shop for all their financial needs, including insurance products. In the case of Ghana, insurance companies have resorted to entering into partnership agreements with banks for the provision of Bancassurance products through the distribution channels of the latter. The Bank of Ghana’s (BOG) approved model for Bancassurance, as emphasised in this Directive, is the Distribution Partnership Model. The model allows Regulated Financial Institutions (RFIs) to sell insurance products to their customers on behalf of an insurer using an RFI’s distribution network. This model permits an RFI to contract one life and one general insurance company and allows individuals to choose their desired product and insurer. The model ensures that there is no sharing of risk between the RFI and the insurer. It also aligns with the Bancassurance model as adopted by the National Insurance Commission (NIC). This Directive is therefore being issued to provide BOG’s regulatory expectations in respect of the approved model, governance and risk management, prohibited activities and consumer protection requirements to the banking industry to ensure that inherent risks associated with the product are adequately managed by RFIs, as well as to further smooth and ensure a seamless implementation of the business of Bancassurance in Ghana between the banking and insurance sectors of the economy.

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