Borrowers will no longer be required to transfer their physical original policy document as collateral to financial institutions when taking out a loan, the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa) announced on Wednesday.
According to the new regulations which came into effect today (Wednesday), policyholders may now choose to assign only a portion of their policy cover necessary to obtain the credit facility being taken.
“This means that when an insurance policy is sufficient to guarantee multiple credit facilities obtained by the policyholder, it is no longer necessary to transfer the entire value of the policy to a single credit provider,” a joint statement issued by the two regulators said.
“The remainder of the policy can be transferred to other credit providers or left as is. This measure can also be applied to existing policies. Multiple cessions can now be accommodated by banks and insurers on a single life insurance policy.”
“We are confident that this will benefit the individual and save money on acquiring separate life insurance policies to serve as collateral for various credit facilities offered by credit lenders.”
This comes as BoN figures show that loans and advances drove up Namibia’s household annual credit by 3.2% year on year (y/y) in January 2022, compared to 2.1% y/y in December 2021, latest official figures show.
In the period under review, mortgage loans increased by 3.4% compared to 2.6% in December, and overdrafts went up 1.2% compared to –3.3% in the previous month.
