Nigerian Insurers Association (NIA) has expressed displeasure over the rising trend of banks in the country compelling customers to insure with their captive firms without any option to choose from.
A captive company is wholly owned company by banks which they use to legitimize inadvertent contravention of the Insurance Act, at an additional charge, to customers who obtains loans.
Eddie Efekoha, Chairman of the NIA, recently said that complaints have reached the umbrella body about the new development of banks and their captive companies to forcing known customers of underwriters to loan collateral with their own insurance companies.
Efekoha, informed, “It has come to our notice concerning customers that often times said that banks and their subsidiaries compel them to insure with their insurance companies.
“That is, the banks compel their customers who took loans to insure the collateral with their own insurance subsidiaries or companies, and that is against the spirit of the Central Bank of Nigeria (CBN) laws because a universal banking license is no more and no client must be forced or compel to insure with any insurance company.”
Rather imposing their insurance companies on customers, the NIA chairman advised, “What is important for that bank customer is to bring a policy from any registered insurance company which notes the interest of the bank that should there be damage to this collateral, the proceeds from the insurance would be made to the bank; and, that is all that is required.”
In the light of this, Efekoha urged such customers to bring evidence of compulsion to indemnify collateral with captive companies
“Therefore, we are educating our insuring public that where banks so insist, they should compel the banks to put it in writing and such letter should be brought to the NIA because we will make such reports to the CBN that their members are not respecting the guidelines for their operation.”
The NIA boss said the association had overlooked such complaints in the past, adding that it has gotten out of hand in recent times and the body can no longer sweep it under the carpet.