Bancassurance refers to cooperation under the bancassurance agreement between banking and financial institutions (BFIs) and insurance companies in the distribution and promotion of insurance products or services through BFIs’ networks.
Bancassurance business refers to the provision of insurance products by the BFIs on behalf of insurance company, but BIFs do not participate in creating the insurance products. Under such business, BFIs may choose referral model or corporate agent model to get commission from insurance companies, and BFs will not bear any responsibility for any risk of insurance products.
Under referral model, staff of BFIs refer the customers to insurance companies and will not be involved in direct sale of insurance products. Under corporate agent model, staff of BFIs promote and sell directly the insurance products to the customers. Pursuant to NBC’s Prakas on Conditions for Banking and Financial Institutions in Carrying out Bancassurance Business, there are annual fees charged to BFIs which choose corporate agent model while there is no such annual fee for referral model.
BFIs can enter into bancassurance agreements with 3 insurance companies at maximum. The bancassurance agreement must include the following minimum terms and conditions:
- Obligations of BFIs and insurance companies, in particular the obligations of insurance companies in conducting trainings for staff of BFIs.
- Provision of information to customers and management on collection and payment of premiums.
- Commission of BFIs including rate and method of calculation of commission
- Claiming procedures and customer protection measures and
- Confirmation of no linkage between banking services and insurance products in order to avoid negative impact on the banking business which may be caused by risks of insurance companies.
Before carrying out bancassurance business in Cambodia, BFIs need to obtain prior written approval from the National Bank of Cambodia and to obtain insurance agent license from the Ministry of Economy and Finance.
(Source: The National Bank of Cambodia’s Prakas No. 7-021 105 dated 30 March 2021 on Conditions for Banking and Financial Institutions in Carrying out Bancassurance Business)