March 31, 2006 by Canadian Underwriter
TD Bank Financial Group has joined a chorus of voices in the banking industry seeking changes to the Bank Act.
In a recent address to TD Bank Financial group’s annual meeting in Vancouver, TD Bank Financial Group president and CEO Ed Clark said TD Bank merely seeks to be able to provide information and not sell insurance products to clients in local bank branches.
Clark said TD bank’s position is aligned with that of the Canadian Bankers Association. “We are NOT asking to sell insurance in the branches,” Clark said. “We ARE asking to:
give information about insurance products in a bank branch when customers ask;
send useful and relevant insurance product information to customers who need it; and
refer customers to an insurance professional. “
As the situation stands now, Clark told the bank’s shareholders, “a customer is in a branch. He or she clearly has an insurance need or question and wants to talk to an insurance professional about it. Right now, we have to say: ‘Sorry, we can’t help you.’
“Instead, we should do right by that customer. Give them some basic information and refer them so they get the insurance they need. That would make Canadians better off.”
The Insurance Brokers Association of Canada supports the federal government’s current position that banks should not be allowed to sell insurance or make referrals from their local bank branches. To do so, IBAC argues, would expose brokers to unfair competition and would allow the banks to use tied-selling to gain competitive advantage over independent agents.
Clark said TD Bank’s position would not hurt the insurance industry or insurance agents, because “we have no desire, or intention, to weaken the insurance agent industry.” He then cited an example of what happened when Quebec allowed the Caisses to sell insurance in their branches.
“Quebec opened the market even further than we are asking, allowing the Caisses to sell insurance in their branches,” Clark said. “The Caisses have about a 30% banking market share in Quebec. That’s over 1.5 times bigger than the largest banks have in Canada.
“The result was an overall increase in the insurance business. Insurance agents were doing more business and customers had more options. We have seen this phenomenon in lots of markets. Allow more participants and the whole market grows. Everyone benefits.”