‘Why some products approval are delayed’
The National Insurance Commission (NAICOM) has explained why some insurance companies’ products submitted to the Commission for approvals are not getting through.
The reason the Commission said is because the products did not create opportunity on how customers who buy the products will be know, as provided in the Know Your Customer (KYC) policy, in line with Anti Money Laundry compliance requirements.
Know your customer (KYC) is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering regulations, which governs these activities.
Mohammed Kari, commissioner for Insurance said those people that are complaining about not getting approval for the products the submitted were unable to provide defence on KYC requirement, and when that happens they start to blame the commission.
“We are interested in encouraging companies to innovate, but they have to meet the standard so that we do not expose the insuring public to risk of fraud by intruders, the commission explained.
Kari said that the Commission has been inundated with complaints from some consumers who took up insurance policies through online platforms, probably managed by unlicensed aggregators.
To stop all of these, we have issued guidelines for different distribution channels including aggregators, so that they can be licensed by us and we can also watch what they do, kari further stated.
Those who spend time browsing the internet would have noticed the ads from Insurance Aggregators on most of the popular websites. But what are these aggregators – what do they do and do we have to take notice?
Insurance Aggregator: This is a website portal or search utility to enable a client to gain several quotes via an electronic e-quote form. The Insurance Aggregator concludes agreements with a number of Insurers to provide a comparative quote based on pre-determined list of specified needs as disclosed by potential clients.
The Insurance Aggregator provides the potential client with comparative insurance quotes and the opportunity to discuss a specific quote. The Insurance Aggregator will transmit the details of the potential client to the insurer and the insurer will contact the potential client to conclude the policy of insurance.
But what is in it for the Insurance Aggregator? The Insurance Aggregator develops the “quotation portal/ search utility”, markets this medium and agrees with the participating insurers to be paid a referral fee for policy contacts concluded based on the client information provided to the insurers by the aggregator.
Internationally there has been a significant increase in the amount of insurance contracts concluded via the internet. The aggregators are developed with this in mind and are marketed as an “ultimate online one-stop insurance shop, giving consumers instant and easy access to a range of insurance solutions, tailored specifically to their insurance profile.”
Insurers participating on aggregators might tend to aim at significant increases in volume of business by providing “stripped down or basic policies”. This is why the Insurance Aggregator would not be the correct medium for the client with a very complex insurance portfolio!
It is expected that the insurance aggregator market will continue to grow with many new players entering the financial market. Customers are gaining a better understanding of the advantages of direct insurance and will approach either the direct insurers or aggregators to find the desired insurance cover at the lowest price.
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