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Abilities Magazine
| March 17th, 2004 | |
The ForumCanadian Association Of Financial Institutions In InsuranceSummer 1999. Issue 39: p. 32 ForumMany Canadians lack the insurance coverage they need to protect themselves and their families financially in the event of a death, serious illness or property damage. Insurance is a vital element of household financial planning, yet the market in Canada remains underserved by traditional insurance providers. The majority of Canadians are simply never approached by a traditional insurance salesperson, who is likely to focus on selling large insurance policies to high earners. Low-income households and those headed by women are less likely to have access to insurance � 38 per cent with incomes less than $30,000 as compared with 52 per cent of those above $75,000. Twenty per cent of Canadians with individual life insurance policies believe they need more coverage. Consumers deserve more information and choices in how they buy insurance. One way to make insurance more accessible is to ALLOW CUSTOMERS TO BUY INSURANCE AT A BRANCH OF THEIR BANK OR TRUST COMPANY. This is a common practice in Europe and the U.S. In fact, Canada is the only major country, besides South Korea, that does not allow in-branch sales. (Quebec is the exception � "caisses populaires" have been selling insurance there for years. The Quebec government recently passed a new law to allow all deposit-taking institutions to sell insurance, but federal rules prevent banks and trust companies from doing so.) How would consumers benefit from being able to buy insurance in bank and trust branches? - NEW CHOICES. Consumers would have a new, easily accessible location where they could obtain information about insurance and make the purchase. Location is particularly important to consumers with disabilities: Most branches provide tailored physical access, which may not be available from insurance brokers. - MORE COMPETITION among insurance providers, meaning better prices and service. - CONVENIENCE that comes with one-stop shopping. In a 1998 insurance industry survey of Canadian consumers, convenience ranked as the most important factor in buying life insurance. Customers should be able to access a full range of financial services at a single location. - MORE OPTIONS FOR SENIORS. Seniors would be able to convert their RRSPs into a life annuity provided by their own bank or trust company, which they are not allowed to do today. A federal government task force recently recommended eliminating the current restrictions on in-branch insurance sales. The MacKay Task Force on the Future of the Canadian Financial Services Sector agreed with CAFII (the Canadian Association of Financial Institutions of Insurance) that Canadian consumers would benefit from increased choice and competition. The current rules protect one part of the insurance industry from new competitors who want to expand the market and make insurance accessible to all Canadians. Who pays the price for these protectionist policies? We all do. Canadian consumers can do better. We deserve a system of insurance distribution that is accessible and fair to all. For more information about this issue or CAFII, contact: CAFFI 250 CONSUMERS ROAD SUITE 301 WILLOWDALE, ON M2J 4V6 TEL: (416) 494-9224 FAX: (416) 495-8723 E-MAIL: [email protected]
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