C.D. Howe study supports banks retailing insurance from branches

Weighing in on the Bank Act review, the C.D. Howe released a study in November that questions the current prohibition on banks selling most kinds of insurance in their branches.

“A few years ago, the case for the prohibition was reasonable,” according to the study’s author, Mark R. Daniels, who has experience in the life and health insurance sector. Today, Daniels concludes in his study, “broader access to a range of insurance products, supplied by an existing network of reliable, well-capitalized financial services providers, is surely in the interest of consumers.”

In a press release announcing the study, Daniels says the only real outstanding question is who would regulate sales of insurance by banks? “Amending federal legislation to incorporate provincial regulation could offer part of the answer,” he says.

The C.D. Howe Institute has publicly released its study about two weeks after Prime Minister Stephen Harper addressed the Insurance Brokers Association of Ontario (IBAO)’s 86th annual convention in Niagara Falls. In his speech, Harper recommitted himself to his government’s campaign pledge not to give banks the power to sell or provide information about insurance products through their local branches. This public policy position should be reviewed, the study’s author believes. The full study is available at: www.cdhowe.org/pdf/backgrounder_97.pdf