October 22, 2015 by Greg Meckbach, Associate Editor
With the five-year review of the federal Bank Act due in 2017, it is “critical” for the Insurance Brokers Association of Ontario (IBAO) to “maintain” its position on banks selling insurance, IBAO President Michael Brattman said Wednesday at the association’s annual members’ general meeting.
Relationships with government are “critical” to “maintain our position with respect to the Bank Act review in 2017,” Brattman told brokers attending the meeting, held at the Sheraton Centre in Toronto during IBAO’s annual convention.
A spokesperson for Insurance Brokers Association of Canada (IBAC) told Canadian Underwriter last summer that the process to revise the Bank Act will start either later this year or in early 2016.
Canadian banks are “authorized” to sell eight types of insurance. They 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 prohibited from selling other types of insurance – such as home and auto – through their branches. They are allowed to sell through subsidiaries but are not allowed to provide access, from the banks’ web pages, to other web pages through which non-authorized types of insurance are sold.
Toronto Dominion Bank and the Royal Bank of Canada write home and auto insurance through subsidiaries (Meloche Monnex Inc. and RBC General Insurance Company respectively). Of the other Big 5 banks, the Canadian Imperial Bank of Commerce and the Bank of Nova Scotia sell home and auto insurance underwritten by subsidiaries of Desjardins Group. The Bank of Montreal does not sell either home or auto.
“We will continue to champion the ability for our consumers to manage risk and buy insurance free from influence and coercion from the banks and credit unions,” Brattman told IBAO members Wednesday. “We know that this is the solution that is in the best interest of our consumers and we will continue to advocate on behalf of consumers’ rights.”
IBAC President Lorne Perry – a guest speaker at the IBAO members’ general meeting – echoed Brattman’s comments Wednesday. Perry suggested that brokers should reach out to new federal members of parliament.
“After Monday’s elections, we must recognize that there are some 150 new MPS that have little to no exposure to insurance-related issues, and namely the issues affecting insurance brokers,” Perry told IBAO members. “Now is a perfect time for us to get together and meet with our MPs as they are setting up their new new offices, for us to get to know them, to offer assistance in helping them get settled, and to take the opportunity to educate them on what brokers do in the community, our concerns on the review of the Bank Act in 2017 and why financial institutions ought not to be selling insurance products at the point of granting credit.”
During his speech, Brattman suggested that IBAO is “well-positioned for the upcoming auto reform changes” in Ontario.
Among the changes the government plans to implement in 2016 are mandatory discounts on premiums, for vehicle owners who install winter tires, starting Jan. 1.
For accidents occurring on or after June 1, 2016, insurers will be prohibited from changing rates – or from deciding whether to renew, cancel or issue a policy – on the basis of what the province calls “minor” accidents. A “minor” accident – in the eyes of the Ontario government – is one in which no one is injured, property damage is no more than $2,000, the cost of all damages is paid by the at-fault party and no payment is made by any insurer for property damage. There will be an exception to this rule for vehicles involved in a total of more than one minor accident in the previous three years – if the driver of that vehicle was at fault.
Also for accidents occurring on or after June 1, 2016, the mandatory accident benefits coverage will be reduced. For non-catastrophic injuries, the minimum coverage required is $50,000 for medical and rehabilitation benefits, and $36,000 for attendant care (half the mandatory limit until 2010). The new mandatory coverage will combine attendant care with medical and rehab, for a total mandatory limit of $65,000.
The limits for attendant care and medical and rehab and will also be combined for catastrophic injuries. Instead of having two separate $1-million limits, there will be one limit of $1 million.
More coverage of the IBAO Convention 2015