Bancassurance Guidelines 2019

In this month's banking updater, we review the Bancassurance Guidelines for Banks and Financial Institutions (the Guidelines) which were published on 13 May 2019. This updater should be read in conjunction with our updater of May 2019 in which we reviewed the Insurance (Bancassurance) Regulations (the Regulations).

As the Tanzanian insurance sector continues to expand and develop, there has been a concerted effort from the Tanzanian government to enable this growth in a coordinated and regulated manner. The inclusion of banks and financial institutions in the Bancassurance business provides significant opportunities for both the banking and insurance sectors in Tanzania.

In order to encourage banks and financial institutions to market insurance products and services in a manner that protects operators and consumers alike, guidelines have been produced by the Bank of Tanzania in order to provide banks and financial institutions confidence to enter a market in which regulation is necessary.

Highlights of the Guidelines

Below are some key highlights of the Guidelines:

In order to engage in Bancassurance business, a bank or financial institution must obtain approval from the Bank of Tanzania and a licence from the Tanzania Insurance Regulatory Authority. In seeking this approval, a bank or financial institution must submit certain bits of key information to the Bank of Tanzania, and other information as may be necessary.

In its consideration of granting approval to engage in Bancassurance business, the Bank of Tanzania shall consider a number of factors, including: Whether the bank or financial institution meets the minimum legal and regulatory capital requirements The viability of the Bancassurance business plan The adequacy of the risk assessment and accompanying mitigants The ability of the bank or financial institution to conduct Bancassurance business in a prudent manner Any amendment to a Bancassurance agreement must be approved by the Bank of Tanzania. This includes amendments to a Bancassurance Agency Agreement which is a legal contract between a bank or financial institution and an insurer, under which the former acts as the insurance agent of the latter. There are a number of reporting requirements for banks or financial institutions engaged in Bancassurance business: Quarterly returns on the performance of the Bancassurance business must be submitted to the Bank of Tanzania one month after the end of each quarter Notes to annual...