On Tuesday, not only did the Insurance Bureau of Canada (IBC) formally congratulate Prime Minister-elect Justin Trudeau, but many brokers also issued him a warm welcome because of what his leadership could mean for the P&C insurance industry in Canada.
While insurance wasn’t among the main talking points during the election cycle, one agenda item does affect industry professionals: the upcoming review of the Bank Act.
“Trudeau is probably the better option, because banks are intense lobbyists, and if they have the ability to sell general insurance from their branches, that introduces a spectre that puts the entire broker network at risk,” said Thom C.J. Young, CEO, Lundgren & Young Insurance Ltd.
Young feels that Trudeau is a more broker-friendly option for this legislation than current leadership, although he does note that other candidates may have been better for the economy overall and “economic disruption is not good for the nation or the industry.”
“Brokers have invested tremendous time and money arguing against that in Canada,” he said. “This Prime Minister was not our best friend on that – he wanted to let the market do what it wanted to do.”
The consequences of repeal could be dire for the independent broker channel.
“In Canada, where we had banks successfully lobby to enter the trust business, you look around and there are no personal trust companies here anymore,” Young said. “They intentionally lobbied to enter into the stock brokering business, and now there are no independent stock brokerages. They’re all affiliated with one bank or another”
In fact, if Trudeau fails to uphold sections eight through 10 of the Insurance Business (Banks and Bank Holding Companies) Regulations, Young foresees abuses such as those in the life and health industry.
“They tell a good story in that they wouldn’t use their influence to force people to buy insurance products to get a loan,” he said, expressing some concern that not all players in the life insurance space have lived up to that boast.
