Brokers speak out against bank/lifeco mergers

Through their national lobby organization, p&c brokers are expressing concern over the proposal to allow banks to merge with demutualized life companies. In a submission to the federal Ministry of Finance, the Insurance Brokers Association of Canada (IBAC) says the mergers could be harmful “if the purpose or end result of such a merger was the distribution of life insurance products through bank branches”. IBAC has fought long and hard to prevent banks from retailing insurance products through their branches and is concerned that the mergers could allow the current ban on such practices to be circumvented.”While entities that currently distribute life insurance would certainly be the first to feel the effects of the possible distribution of their products through bank branches, we are deeply concerned about the precedent that such a move could set for the distribution of p&c insurance, and its effects on consumer choice and competition,” writes IBAC president Ken Orr.IBAC has argued that allowing the big banks to sell insurance through their branches would reduce competition in the marketplace because independent brokers would be unable to compete with the banks’ marketing and sales resources. Orr notes that while the government has said that changing the current restrictions on distribution is not on the table at this time, brokers remain concerned that such a debate could resurface.Orr stresses that should changing the current restrictions on distribution become a part of the discussion on cross-pillar mergers, he expects to see extensive consultation with stakeholders on the possible negative impact such a move would have.