TORONTO, Oct. 3, 2005 – The Insurance Brokers Association of Canada (IBAC) is optimistic after learning that Minister Goodale is putting off a final decision with regards to bank mergers, pending a careful review of changes in the financial services sector.
IBAC hopes the move to delay final decisions about bank mergers was motivated by a desire to protect consumers and would like to see the government apply the same thinking to the insurance market.
“We urge the government to apply the same scrutiny to the retail insurance market,” says Dan Danyluk, CEO of IBAC. “The government must realize that by allowing banks further into the insurance industry through their branch network, it would be giving banks the green light to swallow up yet another industry, to possibly jeopardize the livelihoods of thousands of people, and eventually to provide less choice for consumers of insurance products.”
Consumers of insurance products currently rely on the professional and personal service provided by a highly competitive and healthy distribution system. Consumers should continue to benefit from the choice and competition they get from the current system, which offers products from over 200 insurance companies.
Consolidation in the financial services sector has resulted in dominance in various lines of business. The big Canadian banks already provide, manage or administer over 85% of three of the four traditional financial services pillars, and almost 60% of Canadian household assets.
Consolidation has already given way to branch closures, higher fees, and less choice for consumers. The same situation is inevitable if the Government allows the banks to get further into the retailing of insurance.
Although banks are not asking for retailing restrictions to be removed, they are seeking to circumvent the current rules by replacing the act of selling by direct marketing and advertising from their branches. Marketing and advertising insurance is the thin edge of the wedge of full-blown retailing of insurance products.
IBAC urges the Government of Canada to maintain the current restrictions on insurance marketing, advertising and retailing in order to continue to provide Canadians with professional service, choice, and healthy competition.
The Insurance Brokers Association of Canada, through its 11 member associations, represents 29,000 Property & Casualty insurance brokers across Canada.