The Bank of Ghana (BoG) has released the bancassurance guidelines as an Exposure Draft, inviting feedback from the banking sector and the public, in accordance with the BoG’s Procedures for Issuance of Directives, 2020.BoG notes that bancassurance has experienced significant expansion worldwide, including across Africa, since the 1980s.

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This model allows banks and other financial institutions (BOFIs) to diversify their product offerings while earning supplementary revenue by using their existing distribution networks to collaborate with insurance firms.For insurance companies, this partnership provides an opportunity to expand their market reach and boost sales by utilizing the distribution channels of the BOFIs.

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“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 directive said.

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This model enables Regulated Financial Institutions (RFIs) to offer insurance products to their clients on behalf of an insurer, utilizing the RFI's established distribution networks.Under this model, an RFI can partner with one life insurance company and one general insurance company. Customers, whether individual or retail, are given the freedom to choose their preferred product and insurer.

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Importantly, the model ensures that there is no sharing of risk between the RFI and the insurer.Additionally, the model aligns with the Bancassurance framework endorsed by the National Insurance Commission (NIC).

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“This Directive is therefore being issued to provide BOG’s regulatory expectations to the banking industry to ensure that inherent risks associated with the product is adequately managed by RFIs as well as to further smoothen and ensure a seamless implementation of the business of Bancassurance in Ghana between the banking and insurance sectors of the economy”, the BoG said.

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Regarding sanctions and corrective actions, the Bank of Ghana (BoG) stated that any Regulated Financial Institution (RFI) that fails to adhere to the stipulations of this Directive will be subject to an administrative penalty ranging from a minimum of two thousand penalty units to a maximum of ten thousand penalty units, as outlined in Section 92(8) of Act 930.

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Additionally, the BoG may impose other penalties or take any corrective measures deemed necessary, in accordance with the provisions of Act 930.“Without prejudice to the other penalties and remedial measures prescribed by Act 930, BOG may impose one or more of the following sanctions where any of the provisions herein are contravened:a. Suspend the RFI from engaging in Bancassurance business;b.

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Prohibit the RFI from further lending or taking further financial exposures, including investments, or capital expenditure;c. Restrict payment of bonuses or excessive compensation to the defaulting key management personnel or director; and d. Suspend defaulting person from office or declare that the relevant person is no longer a fit and proper person.

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