Bank president pushes for insurance information in branches

The president of the National Bank of Canada says banks should be able to offer information on insurance products in branches, calling the current system “anachronistic and unjustified.”

In a speech today to bank shareholders in Montreal, Réal Raymond said that the current regulatory framework “imposes serious limits on our insurance strategy and our ability to participate in ongoing consolidation within the insurance industry.”

The federal Bank Act, which currently does not permit life and health insurance information or sales in branches, is up for review later this year.

Last month, the Canadian Bankers Association released a survey suggesting Canadian consumers want easier access to insurance information in bank branches. The Strategic Counsel poll indicated that 91% of respondents agreed that it was “a good idea” to provide consumers with “as many choices as possible for information about insurance products, including bank branches.”

“Consumers have said that they want the ability to shop around, gather information and obtain rates and features about insurance products from a variety of sources, including banks,” said Raymond Protti, president and CEO of the CBA. “Why would anyone oppose Canadians’ right to access the information they want to make informed insurance decisions? How is an informed consumer a bad thing?”

However, the very next day, Advocis, the country’s largest advisor association, released its own poll, which suggested that Canadians are happy with the status quo.

The Pollara survey indicated that 78% of Canadians believe that the current prohibition on banks providing information about life and health insurance, or referring customers to insurance companies, should be kept in place.

“On the surface of it, most people would say they do want more information [about insurance],” said Advocis president Steve Howard. “But if you asked in the context of ‘Would you like more information at the price of your privacy and sales pressure,’ the answer is no.”

More than 90% of consumers participating in the Pollara survey believe that banks already have enough information about them and 81% said they have enough access to life and health insurance information in general.

Canadians seem concerned about the protection of their personal information and how it might be used once it gets into the hands of the banks, Howard added.

“Clients of our members report feeling pressure when they go into bank branches,” said Howard. “In fact, one in five Canadians report they have felt pressure to give more business to the banks following the approval of a loan, line of credit, or mortgage product.”

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For more on this story, be sure to pick up a copy of the March edition of Advisor’s Edge Report.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com