The business beat
By Daniel Huot
By now, many of you have heard about the MacKay Report detailing the increasing role banks should play in our society, particularly in the insurance sector.
Banks have not yet touched this lucrative market, and many small insurance brokers in Ottawa, and across Canada in general, fear a disaster if banks sell insurance policies.
Let’s face it, nobody needs to go to an insurance bureau, but everybody has to go to the bank.
Banks also store data about us that we would rather keep private. They know where we go shopping with our debit cards and they know to whom we write our cheques.
Imagine you regularly purchase pills at the local drug store with your debit card. Upon returning home, you discover an ad offering you your bank’s latest life insurance policy in your mailbox.
Your ignorant broker will never have access to this kind of information. That only makes him less competitive because he cannot invade your privacy.
When you renew your mortgage, or order some cheques at the counter, bank clerks could take one minute of your time to offer you a property and casualty insurance policy.
Every time you go to the cash machine, an insurance ad could also blink on the monitor.
Does this spell disaster?
There’s hardly anything to worry about. Banks have a history of credibility, whereas many brokers selling cheap insurance with high premiums are forced out of the market early in their careers.
Large insurance companies have enormous credibility, whereas small brokers strive to get recognition in the community. You’ll often trust a small broker if a friend says he or she has a good relation with him or her.
Banks would offer fixed prices, a solid reputation, and would have to hire consultants and sales representatives in their local branches.
Small-time insurance sales representatives who cannot compete agains Canadian banks could be out of business, but banks selling insurance policies will need new staff. Brokers could submit their skills, experience, and contacts to Canadian banks who lack this kind of personnel.
With more than 100,000 people working in all the insurance industries combined in Canada, banks will have a hard time eliminating the job pool. Only the assault on small brokers will be merciless if privacy rules aren’t enforced.