It’s time to back consumers: Restrictions preventing Canadians full access to insurance information

For Immediate Release
May 9, 2006

OTTAWA – The archaic restrictions prohibiting Canadian consumers from accessing insurance product information through bank branches have never made sense and they don’t make sense now, particularly for consumers trying to navigate the complicated and confusing insurance marketplace. That is the message that Raymond J. Protti, President and Chief Executive Officer of the Canadian Bankers Association (CBA), delivered this morning in a speech to a joint meeting of the National Press Club of Canada and The Economic Club of Ottawa in Ottawa.

In the Speech from the Throne, the federal government committed to a comprehensive review of the Bank Act, and last week’s federal budget set out a timeframe for the review, with the release of a white paper this spring and legislation tabled in the fall.

Banks have been in the insurance business in Canada for more than a decade but currently, there are rules that prevent consumers from accessing insurance product information — whether print material or referrals to insurance professionals to learn more — through one of the most logical places: a bank branch. While information on insurance products is available from bank financial groups through advertisements, by mail, on the phone or through their websites, this out-dated legislation prevents customers from getting the same information at a bank branch. This is confusing for customers and frustrating for bank branch personnel.

“This is counter-productive public policy that works against the interests of consumers. Despite what some in the insurance industry would claim, this is not protecting consumers. The truth is it is restricting consumers,” said Mr. Protti. “Giving consumers access to insurance product information where and when they want it is a straightforward, good sense public policy initiative.”

During his speech, Mr. Protti outlined the proposed simple changes that would give Canadians more access to insurance information by allowing consumers to:

• Get insurance product information, such as a brochure, at a bank branch.
• Give permission to have insurance product information tailored to their specific circumstances sent to them if they wish.
• Get a referral from bank branch personnel to a qualified insurance professional outside of the branch. This could be a referral to a bank-owned agency, a call-centre, an independent agency or a third party insurance corporation with which the bank has a relationship.
• Ask to have relevant information referred to an insurance affiliate to make it easier for the consumer to obtain information about a product they are interested in.

“Insurance is an important product,” said Mr. Protti. “The more opportunity consumers have to learn about insurance products, the better the chance there is that they will access the product,” he added.

Only 39 per cent of Canadian households have a relationship with a personal life insurance professional and 21 per cent of households generally have no life insurance coverage at all.

Moreover, as Mr. Protti noted in his speech, other financial services providers, including brokers, insurance companies and mutual fund dealers are able to offer their clients banking products like deposit accounts, credit cards, loans, mutual funds, as well as insurance all in one place, but banks are barred from doing the same.

“So it’s acceptable for other financial services providers to meet the needs of their clients, but not banks?” he asked. “Why, as the vast majority of rules have been changed to support greater consumer choice, have the puzzling and frustrating restrictions on a consumer’s ability to obtain information about bank insurance products remained in place? It makes no sense,” he said.

Mr. Protti closed his speech by noting that there is no reasonable or logical public policy rationale left to prevent the package of changes the banking industry is proposing from being adopted. He noted that the proposed changes would not affect any of the strong consumer protection measures governing privacy or coercive tied selling that are already in place.

“In no other situation would it be acceptable to regulate the restriction of product information to consumers. No one would allow it. It would be roundly chastised as anti-consumer,” said Mr. Protti. “Consumers deserve, at the very least, to know what insurance product choices are available to them. I say, it is time to back the consumer. It just makes sense.”

The Canadian Bankers Association is an industry association representing the domestic and foreign chartered banks of Canada and their 249,000 employees.

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For more information:
Melanie Minos, Manager, Media Relations
Tel: (416) 362-6093, ext. 220
Cell: (416) 587-7733
E-mail: mminos@cba.ca