The banks and insurance advisors are squaring off again in their battle over federal Bank Act restrictions on the extent of insurance services that the banks can offer in their branches. Their weapons of choice this time? Opinion polls.

In mid-February, both the Canadian Bankers Association and Advocis released surveys of Canadian attitudes about insurance marketing. The surveys’ results are diametrically opposed, adding to the new federal government’s difficulty in deciding how to move forward with the upcoming reform of the Bank Act — due to be completed by October.

The CBA survey says 91% of consumers want more insurance information from a variety of sources, including bank branches.

The Advocis survey, meanwhile, says 78% of consumers are in favour of keeping the present restrictions on expanding banks’ ability to provide insurance information or make referrals to an outside insurance professional. And 91% of consumers surveyed said they believe the banks have enough, or more than enough, information about them.

Although the results of the surveys seem contradictory, both sides are quick to back the credibility of their polls.

The CBA poll asked questions that were “straightforward, clear and transparent,” says Caroline Hubberstey, the CBA’s director of public affairs. “In short, it found that the current restrictions don’t make any sense and consumers support the changes we’re proposing.”

Advocis chairman Gary McLeod says the Advocis survey shows consumers support the view of insurance advisors: “It’s not an issue of the banks providing more information to consumers. It’s an issue of consumers not wanting to provide more information to the banks.”

At present, the banks can offer creditor-related life and disability insurance, and travel insurance, in their branches. They sell other insurance products through insurance companies they have purchased, through proprietary sales forces and through insurance-licensed securities advisors. And they are permitted to market directly to customers through the mail and the Internet, as long as they don’t target particular customer groups.

But they cannot offer printed information or make referrals about life and health insurance that is not linked to credit.

These restrictions are “anti-consumer,” says Hubberstey. “How is it protection not to be informed? How is not being able to pick up a brochure, or get a referral that you want, protection?”

“Our members deal with Canadians every day,” McLeod counters. “We already respond to the needs of everyday consumers at the kitchen table and the boardroom table.”

Advocis also has a slight political edge on the banks. In its pre-election platform, the Conservative Party of Canada specifically promised to maintain the current regulations restricting the marketing of insurance by the banks. “We will be watching to make sure they follow through,” says McLeod.

But an election promise is not a legislative guarantee, and the CBA is not going to be deterred. “It’s incumbent on us to put forward our case,” says Hubberstey.

Both groups will be undertaking further lobbying efforts.

A closer look at both surveys shows the evidence to support either the CBA’s or Advocis’s position is not as clear as these organizations are publicly suggesting. Weaknesses can be found in both sets of results.

Notably, neither survey asked the key question of the day: should banks be allowed to sell life and health insurance in their branches?

Advocis

Advocis used national polling firm Pollara Inc., which conducted the survey in mid-November 2005, interviewing 1,876 consumers across the country.

Advocis survey participants were told that “bank branches are generally not allowed” to provide printed life and health insurance information nor make referrals to life and health insurance companies, and were then asked whether or not these protections should be kept in place due to privacy concerns: 78% of respondents said the protections should be kept in place; 15% said they should be removed; and 6% didn’t know or declined to answer.

When asked whether they have enough information about life and health insurance products, 16% responded that they had “more than enough”, 65% said “enough”, and 16% replied “not enough.” Only 3% didn’t know or declined to answer.

One of the key concerns raised by Advocis and its members about banks getting further into the insurance business has been the potentially adverse impact of the banks, as credit-lending institutions, having personal health information about its customers.

Survey participants were asked to “imagine that banks are allowed to sell life and health insurance out of their branches” and, having purchased a policy from their branch, if they would be concerned “about whether the health information in [their] insurance application is kept separate from [their banking] information, such as loan or mortgage applications.”

@page_break@Seven in 10 respondents said they would be “very” (35%) or “somewhat” (35%) concerned about whether the bank would keep the two types of information separate.

In the banks’ defence, Hubberstey notes that federal privacy legislation — in the form of the Personal Information Protection and Electronic Documents Act — has been in effect for all private businesses since Jan. 1, 2004, and it deals with this concern.

McLeod says when respondents to the Advocis survey were asked whether “to the best of their knowledge” prohibitions against tied selling “currently exist or not” only 30% knew they exist, 28% said they didn’t exist and 42% didn’t know either way.

However, among those who have been approved for a loan, mortgage or line of credit within the past seven years, only 19% felt pressured to “give [the bank] more of [their] business.” Among those who use credit unions, only 13% felt pressured.

Bankers association

The CBA poll was conducted by The Strategic Counsel, based in Toronto and Ottawa. The firm spoke to 1,358 Canadians in October 2005.

The three stated objectives of the poll were to determine: public preference for choices when obtaining information about insurance information; whether consumers perceive they have any obligation to buy insurance from a bank if that’s where they received a brochure or referral; and, whether it would be useful to have insurance information before speaking with a broker.

The CBA survey wasn’t focused exclusively on life and health insurance products. It also looked at public attitudes on obtaining information about “financial products,” including life, home and auto insurance, as well as RRSPs, RESPs and GICs — most of the latter of which are already available through the banks or their subsidiaries.

Therefore, while 91% of survey participants agreed they should have as many choices as possible, including bank branches, for receiving information about insurance products, it should be noted that “insurance products” covered a wide gamut.

Survey participants were asked if picking up printed information about “insurance products” in a bank branch would make them “feel obligated to purchase insurance through the bank’s source”: 37% said “probably not” and 48% said “definitely not.” These responses are somewhat muddied by the fact that bank branches already distribute brochures about some insurance products.

When respondents were asked whether they would perceive an obligation to purchase insurance products based on bank branch referrals to a “qualified insurance professional,” 81% said they definitely or probably would not. But the question did not define the meaning of “insurance product.”

Only one set of questions in the CBA survey looked at life insurance separately from other financial products. Respondents were asked whether or not they agreed they “should have the ability to shop around for information-gathering from different sources and providers, obtaining advice on rates, features and best options if you were interested in purchasing the product.”

For life insurance, 92% said they “strongly” or “somewhat” agree. However, the question did not specifically ask whether the “shopping around” should include bank branches. The banks are already able to sell mortgage-related life insurance. IE