IBAC asks brokers to explain Bank Act to federal election candidates

As politicians campaign for the federal election scheduled Oct. 19, the Insurance Brokers Association of Canada (IBAC) is asking its members to contact local candidates about the federal Bank Act.

“We are asking them – whatever party they support – to get a hold of the candidate in their riding,” Steve Masnyk, IBAC’s manager of public affairs, told Canadian Underwriter. He added this is part of a “two-pronged” approach that IBAC is taking with the Bank Act.

The other “prong” is IBAC has approached Canada’s political parties, Masnyk noted.

The eight “authorized” types of insurance that banks are allowed to sell are: credit or charge card-related; creditors’ disability; creditors’ life; creditors’ loss of employment; creditors’ vehicle inventory; export credit; mortgage; and travel.

Canadian banks are authorized to sell other types of insurance, such as property and auto, through subsidiaries. However they are prohibited from selling “other” types of insurance through their branches.

“Our outreach to parties is to state that the current restrictions make sense for consumers,” Masnyk said.

IBAC’s position is that credit-granting institutions should not be selling insurance at the point of credit.

Since March 1, 2012 – when amendments made in September, 2011 to the Bank Act came into force – banks have also been prohibited from providing access, from their web pages, to other web pages through which insurance other than “authorized” types are sold.

Canada’s restrictions on banks selling insurance “work well in practice and should not be lifted,” Masnyk said.

The Conservative, New Democratic, Liberal, Green and Bloc Québécois parties “have agreed with that position,” he added. However, the five-year review of the Bank Act is due in 2017, and Masnyk noted the process to revise the law will start later this year or in early 2016.

“Revisions, when they do take place, will be voted on and influenced by all MPs from all parties,” Masnyk said.

IBAC does not endorse any particular party.

IBAC’s goal is for its members “to reach out to as many candidates in their ridings as possible,” Masnyk said, adding IBAC would like brokers to build relationships with local candidates.

The goal, he added, is to educate political candidates on why the Bank Act restrictions “make sense for consumers.”

Canada’s two largest banks – when measured by annual revenue – both operate subsidiaries that write home and auto.

The second largest bank, Toronto Dominion (which reported revenue of $29.96 billion last year), owns Meloche Monnex Inc., which in turn owns home and auto insurance provider Security National Insurance Company. TD Insurance ranked third in P&C (behind Intact and Aviva), in 2014, by net premiums written, according to the Canadian Underwriter Statistical issue. The 2014 figures count Desjardins and State Farm Canada separately. Desjardins now owns State Farm’s Canadian operations.

Canada’s largest bank, the Royal Bank of Canada (which reported $34.1 billion in revenue in the 2014 fiscal year), writes P&C insurance through RBC General Insurance, which was ranked 15th in 2014, in the Canadian Underwriter statistical issue.

The Bank of Nova Scotia and the Canadian Imperial Bank of Commerce (which rank third and fifth respectively) sell home and auto coverage underwritten by insurers owned by the Desjardins Group.

Canada’s fourth-largest bank – the Bank of Montreal (BMO), with $16.7 billion in annual revenue – does not currently sell home or auto insurance.

When asked last May, by Canadian Underwriter, whether BMO has any plans to sell P&C, a spokesperson replied: “We’re pleased with our current portfolio of insurance offerings and at this time have nothing further to share with regards to any new product launches.”