Guidelines out for banks selling insurance products
THE INSURANCE Commission (IC) has released guidelines on the conduct of bancassurance in the country, listing among others regulatory requirements and the role of the bank and the insurer.
Under the implementing rules and regulations on bancassurance contained in Circular Letter No. 2015-20 signed by Insurance Commissioner Emmanuel F. Dooc last April 27, the selling of insurance products, including variable life insurance products, within the premises of a bank is only allowed after the IC has approved the bancassurance agreement entered into by and between the insurance company and the bank.
Cross- selling of microinsurance products by rural, cooperative and thrift banks shall however remain to be governed by Bangko Sentral ng Pilipinas (BSP) Circular No. 683 dated February 23, 2010, the statement released by the Insurance Commission yesterday said.
“Bancassurance or cross- selling of insurance products by insurance companies may be conducted only in premises of banks having secured prior Monetary Board approval to engage in the said activities. Insurance companies cannot offer, for cross-selling at any bank, insurance products which do not bear the prior approval of the Insurance Commissioner,” the guidelines read.
In the exercise of its regulatory and supervisory powers over insurance companies, the insurance regulator would also require that the bancassurance agreement contain a provision that the insurance company will comply with all its requirements and provide a “disclosure of conflict of interest” statement, the product proposal and the policy contract prior to securing the approval from the commission.
Bancassurance refers to the selling of insurance products within bank branches. Under Republic Act No. 10607 or an “Act Strengthening the Insurance Industry,” also known as the amended Insurance Code, banks are no longer required to have a 5% equity in insurance companies to enter into a bancassurance deal.
Any bank can now get into the bancassurance business as long as it complies with the requirements set by the IC and the BSP.
On the role of bank employees in bancassurance, the guidelines said that as a general rule, their role “shall be limited to the referral of clients to the representatives of the insurance company.”
“Bank employees are not allowed to conduct substantial presentation of insurance products, which involves discussion on the details and particularities of insurance products. The bank employees may not conclude any contract and must refer such conclusion to the insurance agent,” the IC added.
However, bank employees who have undergone the mandatory training and possess the required qualifications may make preliminary presentations of their firms’ insurance products as part of their task of offering product options to clients.
As for reportorial requirements, insurance companies are mandated to submit an annual report showing a list of the banks with duly executed bancassurance agreements entered into by the concerned insurance company, the circular stated.
In order to protect the insuring public, the guidelines also provide that both the banking institution and insurance company should formulate an effective consumer protection framework specifically designed to address all complaints that may arise from the conduct of bancassurance, which shall include processes and procedures, among others.
Non-compliance with the mandatory requirements provided in the implementing guidelines and rules issued by the IC, the BSP and other competent government authorities, will warrant suspension of bancassurance activities and penalties or fines, according to the circular.