Banks take branch insurance sales to Supreme Court

Canada’s largest banks have asked the Supreme Court of Canada to rule the Alberta Insurance Act be ruled “constitutionally inoperable or inapplicable to federally-regulated banks that promote the sale of insurance to their customers,” A.M. BestWire reports.
At the Alberta Court of Appeal, the court has recently ruled in favour of the Alberta Insurance Council, which took action against the banks for selling creditor insurance in branches without a licence.
According to A.M. Best, the Bank of Montreal, Canadian Imperial Bank of Commerce, HSBC Bank Canada, National Bank of Canada, Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, and the Canadian Bankers Association have sought leave to appeal the decision of the Alberta court to the Supreme Court of Canada.
“Attorneys general from British Columbia, Ontario, New Brunswick, Quebec and Saskatchewan have lined up against the banks and in support of the Insurance Council of Alberta, the regulatory body responsible for licensing and discipline of insurance agents, brokers and adjusters in the province,” A.M. Best says.
The court action focuses on insurance restrictions in Alberta, but banks want other provinces to relax regulations that prevent them from selling insurance through branches. According to A.M. Best, the banks’ appeal “comes ahead of a report to be released by the Department of Finance that would outline the government’s position on this issue.”
Currently under Canada’s Bank Act, which is up for review this year, banks can promote insurance through the mail and the Internet but not within their branches. Bank leaders have called publicly over the past month for removal of these restrictions. The Insurance Brokers Association of Canada says the restrictions are in place to promote fair competition between banks and independent insurance brokers.