Canadian Underwriter
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Banks will be hard to regulate, says Cooke


April 1, 1999   by Canadian Underwriter


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Property & casualty insurance is a pure risk product that must be kept separate from the financial, wealth management and investment-based services provided by life insurers and banks, George Cooke, president of Dominion of Canada General Insurance Company, told a Toronto Board of Trade breakfast recently. Cooke, advocating banks not be allowed to retail insurance in their branches, had been asked to offer his views on the restructuring of Canada’s financial pillars.

“We are property and casualty insurers. We are the people who sell you car, home and business insurance. We are the most heavily regulated financial services sector,” Cooke told breakfast delegates. Noting that unlike banks, every move by p&c companies is subject to regulatory approval, Cooke points out that it is illegal for p&c insurers to ask consumers about their profession, income level and other collateral information, data the banks and other financial service providers are compiling daily.

While the MacKay report suggests regulating banks to ensure they do not use their vast accumulated data when marketing and pricing p&c products, Cooke contends no legislation can sufficiently ensure a level playing field. “It is simply ludicrous to presume that the banker’s intimate knowledge of your financial affairs will not seep into the underwriting process. What’s more is their ability to use this information to segment their customer list to aggressively target my customers, these are very significant competitive advantages and that causes me serious concern,” he says.

Cooke adds banks will likely flood the market with cut-rate prices and then raise them once the insurers are wiped out. Also, the overwhelming competition of the banks will force insurers to further consolidate, leading to less competition, less consumer choice and higher prices. “At the end of the day, there will be no benefit to the consumer. In fact, the opposite is likely,” he warns.


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