IBAC “optimistic” about Bank Act review

The Insurance Brokers Association of Canada (IBAC) says it is “optimistic” the federal government won’t allow local bank branches to advertise insurance products after learning that Finance Minister Ralph Goodale is putting off a final decision about bank mergers.
Goodale recently postponed a discussion of changing the Bank Act to allow bank mergers. “I do not believe it would be appropriate to bring forward guidelines on such an important issue in this environment, where it runs the risk of being politicized,” Goodale said in a public statement. “In the meantime, the Government will proceed with its review of Canada’s existing legislation that governs the financial services sector.
“This review will deliver tangible improvements for consumer protection, streamline regulation, and create opportunities for our financial sector.”
IBAC says it hopes the government’s move to delay final decisions about bank mergers was motivated by a desire to protect consumers, and would like to see the government apply the same thinking to the insurance market.
“We urge the government to apply the same scrutiny to the retail insurance market,” says Dan Danyluk, CEO of IBAC. “The government must realize that by allowing banks further [access] into the insurance industry through their branch network, it would be giving banks the green light to swallow up yet another industry, to possibly jeopardize the livelihoods of thousands of people, and eventually to provide less choice for consumers of insurance products.”
Currently consumers receive insurance products from more than 200 insurance companies, IBAC estimates. In a press release, IBAC says consolidation in the financial services sector has resulted in bank dominance of various lines of business.
“The big Canadian banks already provide, manage or administer over 85% of three of the four traditional financial services pillars, and almost 60% of Canadian household assets,” the IBAC press release says. “Consolidation has already given way to branch closures, higher fees, and less choice for consumers. The same situation is inevitable if the Government allows the banks to get further into the retailing of insurance.”
Banks are not asking for retailing restrictions to be removed, but they are seeking to allow direct marketing and advertising of insurance products from their branches.
“Marketing and advertising insurance is the thin edge of the wedge of full-blown retailing of insurance products,” the brokers’ association warns. “IBAC urges the Government of Canada to maintain the current restrictions on insurance marketing, advertising and retailing in order to continue to provide Canadians with professional service, choice, and healthy competition.
IBAC, through its 11 member associations, represents 29,000 Property & Casualty insurance brokers across Canada.