Microlenders miss out on insurance licenses

Microfinance banks miss out on the Bancassurance licenses as the list of players jumps almost threefold from eight to 21 between June and December last year.

Botswana retail lender Letshego, Maisha Microfinance, SMEP, Unaitas, Parabank, Chase, CBI, and Family who had licenses in 2021 did not get a green light to transact insurance by last month.

Jamii Bora makes a return on the list as Kingdom along with new inclusions of Prime and Paramaount bancassurance.

The number of Bancassurance players fell 70 percent in June last year following the implementation of new rules requiring lenders in the insurance business to increase minimum capital to Kes5 million which is higher than what is required of brokers (Sh1 million).

The bancassurance entities were to provide a Kes10 million bank guarantee or a government bond and the lenders were required to own 100 percent of the agents, obtain collaboration agreements with insurance companies and prominently display the name of the underwriters in any advertising feature.

The new regulations will also limit a bancassurance company to seek approvals before selling any products to their customers.

They will not be allowed to deduct premiums from their customer accounts without prior written consent.

Before selling insurance, the bancassurance agents must in writing inform you can select your own underwriter and should not advise or coerce you to cancel an existing policy.

They should also not stop you from looking for a bancassurance company of your choice or choosing to deal directly with the insurance company.

Further, they should also ensure the confidentiality of customer data and address complaints promptly.

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