Burkina Faso:Authorities rein in commission malpractices in life insurance sector

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Burkina Faso, one of the 14 member countries of the Inter-African Conference on Insurance Markets (CIMA), has decided to cap the commissions paid by life insurers to banks at 5% instead of 15%.

This decision also prohibits paying commissions to bank account managers or staff.

As a reminder, Burkina Faso adopted a decree in April 2002 setting floor rates and ceilings for commissions according to the different branches of insurance, reported Financial Afrik.

In a statement, the Ministry of the Economy and Finance said that for the life branch in general, and particularly for borrowers’ death insurance, the commission rates applied are often much higher than the relevant ceiling rates.

“From our surveys of banks, it appears that in addition to commissions paid to banks for intermediation, other types of commissions would be paid to advisors. This double remuneration makes the commission rates paid higher than the regulatory rates ”.

These practices, says a ministerial note addressed to the directors of insurance companies, are “contrary to regulatory requirements and could be of a nature to discredit and induce harmful effects on this segment of the market in particular and in general on the entire life insurance sector in our country.”

In any case, the Ministry of the Economy and Finance says that surprise inspections will be carried out to ensure that regulations are complied with, in particular, with regard to provisions relating to commission rates for the life branch. Any offenders will reimburse unduly paid commissions and will be penalised in accordance with the provisions of the Insurance Code.

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