With the release of Market Conduct Guidelines for Takaful and Retakaful Insurance Operators, the National Insurance Commission (NAICOM) expects new investment and product innovation to drive penetration in the industry.
The framework according to NAICOM sets out the minimum standards required from takaful insurance operators in their dealings with participants/policyholders, shareholders and other stakeholders, and seeks to promote greater fairness and transparency between policyholders and the operators.
The “Market Conduct Guidelines for Takaful and Retakaful Insurance Operators,” among other things, stipulate the general licensing and authorisation requirements for takaful insurance operators and intermediaries – as well as spelt out the responsibility of operators in ensuring that their activities are properly coordinated and carried out in a professional manner.
Specifically, the regulation prohibits takaful insurance practitioners from any form of unfair practice including making or causing to be made any misrepresentation concerning the benefits, advantages, conditions, or terms of a takaful policy as well as providing false information or failure to make full disclosure of all requested information on an application for services/products.
The guidelines also frown at using false or misleading information to induce the lapse, forfeiture, exchange, conversion, or surrender of a takaful policy and further bars operators from obtaining money or property by means of any untrue statement of a material fact or any omission of a material fact necessary in order to make the statement made (in light of the circumstances under which it was made) not misleading.
Rasaaq Salami, NAICOM head, Corporate Communication and Market Development, said the move was part of the commission’s strategic objectives to drive innovation of products and services and ensure that operators are professional in the conduct of their businesses in line with best practices.
Furthermore, the guidelines specified that it shall be illegal for any takaful insurance operator and intermediary to solicit, offer or allow commissions and/or rebates in the transaction of takaful businesses except as provided by the extant insurance laws or approved by NAICOM.
The document stated, “For the avoidance of doubts, overriding commission, business acquisition fees and other similar fees not provided for by the Nigerian Insurance Laws shall not be solicited, deducted, offered or paid in Takaful Insurance transaction.
“A takaful insurance operator, who grants or receives a rebate, offer, demand, pay or receive commission in any form contrary to the extant insurance laws and regulations issued by the commission may, in addition to the penalty prescribed therein, be liable to other penalties as may be prescribed from time to time by the commission.”