Canadian Regulators Investigate Banks Selling Insurance

Canadian regulators are investigating whether banks have improperly solicited insurance business from their banking customers. Banks have been allowed to own insurance companies for about 20 years, but are not allowed to sell insurance products directly through bank branches or bank websites, said Steve Masnyk, manager of public affairs for the Insurance Brokers Association of Canada.

The IBAC filed a complaint with the Office of Superintendent of Financial Institutions, which oversees banks, alleging the Royal Bank of Canada and the Bank of Montreal have broken that rule, Masnyk told A.M. Best.

“We don’t have an issue with banks owning insurance companies, but are opposed to them retailing insurance directly with the bank, especially at the point where credit is granted,” Masnyk said. “It’s unfair to people when they are applying for credit to be pushed into any kind of insurance product.”