Scotia’s insurance play aims to gain depositors

Scotiabank is hoping its foray into Ontario’s property and casualty (P&C) insurance market will net the company a few new banking customers, said Scotiabank senior vice president and Insurance Canada head Mark Cummings.

While stressing that there are currently no plans to market banking products to Scotiabank’s insurance clients, Cummings expects that some new policyholders will take an interest in Scotiabank’s banking services.

“If someone that is not a customer of the bank takes out a home and auto insurance policy, it provides an opportunity for them to become a banking customer as well,” said Cummings. “It’s a good benefit for us because they will now get to know Scotiabank.”

Cummings noted that while there are restrictions on marketing banking products to insurance customers, these regulations are not as strict when governing the marketing of banking products to insurance clients.

The Office of the Superintendent of Financial Institutions (OSFI), which regulates both banks and insurance companies in Canada, would not comment on the matter and instead referred to sections eight and nine of the Insurance Companies Act.

Cummings did state that if a marketing campaign — aimed at selling banking products to Scotiabank’s insurance clients — was launched, it would not have much of an effect on Scotiabank’s insurance representatives.

“We don’t want our insurance people to proactively market a mortgage because they are not qualified to do that,” Cummings said. “The way in which we would do it is to make a new insurance customer available to people in the bank that are qualified to cross sell bank products. It would not be done by the insurance people.”

A spokesperson for TD Bank Financial Group, which offers personal banking services through TD Canada Trust and P&C, health and life insurance through TD Insurance, said that it is not currently marketing personal banking products to its insurance customers. The spokesperson added that “it is common practice within the bank to market, promote and cross-sell products between different businesses,” while emphasizing that TD’s sales and marketing practices comply with all existing regulations.

A spokesperson for RBC said RBC Royal Bank does not market banking products to RBC Insurance customers.

Brian Yetman, the president elect of the Insurance Broker’s Association of Ontario (IBAO), said that the IBAO would not take issue with any future Scotiabank marketing plan as long as that plan adhered to all the relevant federal and provincial rules.

However, Yetman was apprehensive about the way in which a potential marketing database could be created by Scotiabank.

“From the P&C standpoint they [Scotiabank] do not currently have a customer database in place. Until we understand how that database is being developed we don’t have any position. As that starts to happen, time will tell whether or not we have a concern.”

(08/27/09)