INSIGHT

JUN E 1 9 , 2 0 1 9

Bancassurance Guidelines 2019

Written by Peter Kasanda, Michaela Marandu, Tenda Msinjili and Jasper Dymoke

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 financial statements must disclose the income and expenses associated with the
provision of the Bancassurance business

Operational requirements
The Guidelines also propose how banks and financial institutions should operate to regulate and maximise
success in the insurance sector. The purpose here is to ensure that customers are suitably informed of the
products available to them. As such, staff are expected to have the requisite training to enable them to
explain the key attributes of insurance products and should be aware of the risk of misrepresentation and
misleading statements when selling such products.

The Guidelines are explicit about what should be standard expectations of a non-insurer entity marketing
insurance services. For example, a bank or financial institution must make it known that it does not
underwrite risk or act as an insurer in any capacity whatsoever, as well as the need to inform the customer
of the premium being charged.
 Consumer protection
Supporting the theme of consumer protection that was established in the Regulations with the ban of tied-
selling, the Guidelines lay out a number of measures to safeguard the interests of consumers. These are
typical of an entity marketing insurance products, ranging from confidentiality obligations to the need to
avoid customer coercion.

Whilst there has always been collaboration between the banking and insurance sectors, it will be interesting
to see how both sectors work together to take advantage of what is a fast developing business, whilst at the
same time, maintaining an awareness of the need to protect consumers. As such, simple compliance
measures have been put in place to ensure their interests are not jeopardised. For example, banks and
financial institutions must not offer different rates to those offered by the insurer and must be cautious
when it comes to branding, ensuring that insurance documents are not branded by the bank or financial
institution's name, logo or corporate colours.

Sanctions
Should the Guidelines not be adhered to, the Bank of Tanzania has the authority to impose a number of
wide-ranging sanctions:

A monetary penalty (unlimited)

Suspension from engaging in the Bancassurance business

Suspension from accessing the credit facilities of the Bank of Tanzania

Suspension of lending and investment operations

Suspension of capital expenditure

Suspension of the privilege to accept new deposits

Suspension from office of the defaulting director, officer or employee

Disqualification from any position in any bank or financial institution in Tanzania

Revocation of banking licence

It is fair to say that whilst the Bancassurance business presents huge opportunities for both banks and
insurers alike, both sectors, but particularly the banking sector, must be aware of the obligations and
requirements in place when marketing insurance products.

ed content
 2019 0 6 MAY, 2 0 1 9

nsurance (Bancassurance) Regulations Investing in Government Securities in

Tanzania

, 2019 2 8 MAY, 2 0 1 9

Regulations on Electronic Funds New Regulations on Mortgaging Land

fer and Cash Transaction Reporting

 Authors

Peter Kasanda
Partner

Michaela Marandu
Senior Associate

Tenda Msinjili
Senior Associate
  More by the authors

New Regulations on Electronic Funds Transfer and Cash Transaction Reporting 

New Regulations on Mortgaging Land 

The Insurance (Bancassurance) Regulations 

The Establishment of the Land Transport Regulatory Authority 

Investing in Government Securities in Tanzania 

 Categories

Sectors

Insurance & Reinsurance

Services

Finance

Locations

Dar es Salaam

Type

English Legal developments

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