RBC sidesteps legislation, opens insurance office

The Royal Bank’s RBC Insurance subsidiary recently opened its first retail office evading the federal Bank Act’s ban on the sale of insurance at bank branches.
The new office is located in Scarborough, ON and is located directly beside a Royal Bank branch. The new insurance office holds a separate lease, signage and entrance from the nearby RBC branch.
RBC says this year alone it will open four more insurance-only locations this year, with its sights set on growing to approximately 100 branches nationwide.
“Our decision was to build them near our bank branches and give RBC customers, and also the general public, another way of purchasing various types of insurance,” Neil Skelding, RBC Insurance CEO, says. “We can’t offer that in branches today under the current Bank Act. But we can offer it beside or near those bank branches.”
Recently, as the federal government reviews financial services legislation, Canadian banks revisited their pressure Ottawa to allow banks to market insurance in branches.
Under current legislation, banks can own insurance operations, advertise them and sell policies to consumers who contact them by phone or the Internet but they cannot promote their insurance products in a branch. Furthermore, branch staff are not entitled to provide insurance information or refer clients to insurance agents.
The Canadian Bankers Association has requested that the Finance Department allow bank branches to provide insurance “information and referrals.” The government must amend the Bank Act by October 2006 and if it amends the act in favor of banks (ie. removes bank insurance sales restrictions) it is possible that independent insurance brokers will suffer.