Whereas the tied selling pressure that can be brought to bear on consumers by banks to purchase their property & casualty and life insurance products is clear there is one key issue which mitigates against the banks being able to sell insurance of any kind through their bank branches or via the web.
I will describe the case for the life insurance sector since I can speak to this through my own experience in the industry.
Banks sell commodities - products sold in a transactional environment - in a branch.
Life insurance is not a commodity. It is among the most complex financial instruments in the financial services sector. It requires professionally designated, trained, and fully experienced advisors to offer the optimum value to each client based upon a clear analysis of their unique personal and financial lifestyle and medical circumstances. The engagement of a client is premised upon consummate trust in the advisor's professional qualification and integrity to serve as a financial practitioner.This cannot happen in a bank branch or through a bank website under the current banking distribution model.
The basis of the confusion in the current financial services distribution environment, which has had a long history, is this. We are in the most disruptive personal financial environment since the depression. What we need most are financial practitioners. What is available is product promotion without comprehensive planning - in all but a very small segment of the distribution chain. Advisors get paid by selling products. Fee for service advice driven by planning is not the industry MO. The banks and insurance industry as a whole have driven this model for a very long time.
When we are in pain we seek out a physician and want to simply know if "We will be OK".
If the doctor prescribes medication after a diagosis we fill the Rx. In our industry financial 'prescriptions' are dispensed because that is the basis upon which advisors earn a living.
It is not difficult to understand the confusion that the public face in this area of their lives.
In my opinion all of the above has influenced Mr. Flaherty's decision in favour of the new legislation.
I am sharing this with you because I believe it to be a root cause of the dilemma.
I hope it adds some insight with regard to the life sector.