Editorial: Bank “bogeymen” and other outdated myths

Bank bashing.
In 2009, this became a national pasttime.
And, for many, with good reason.

The launch of bank websites selling insurance prompted anger and action across the country–and eventually resulted in the federal Minister of Finance, the honourable Jim Flaherty, weighing in on the matter. (Flaherty announced that banks could not sell insurance through their online websites in an October 2009 public declaration. In his statement, Flaherty openly criticized the banks and reminded these financial institutions that selling insurance through their online websites contradicted the letter, and the intent, of current legislation.) Flaherty’s announcement came after months of public debate on whether or not banks–credit-lending institutions–should be allowed to cross-sell to their banking customers. It was a slap on the wrist that was heard across the country.

While this recent standoff between brokers and banks created a solidarity among the Canadian broker community, it prompted a few industry folk to question recent tactics used by various groups and individuals within the insurance industry.

The main point of contention was whether or not the strategy of depicting banks as “big, bad, bogeymen” really helped. The argument here is that banks are not the problem–loss of market-share is the problem. Or, as one reader pointed out: “Banks really aren’t the bad guys. They’re just one more direct writer.”

This distinction is important, particularly during a time when so many clients–both in personal and commercial lines–are forced to pay more attention to the bottom line. This “bogeyman” strategy also comes on the heels of international applause for the fortitude the Canadian banking system and our financial regulator showed during the worst global recession in 80 years.

It should go without saying, then, that the real battle is not with the banks, but with an eroding market-share. So, as exhilarating as it may be to highlight last year’s broker-win (see Bob vs. The Banks, October 2009, pg. 10), this fight is far from over.

This is the impression one reader got from the events of 2009. And rather than sit and stew about it, Mr. Hylands decided to put pen to paper and be proactive. In his Letter to the Editor, Mr. Hylands offers insight into how the “bad guy/good guy” dichotomy is hurting rather than helping brokers. He also offers some sage parting advice: Offer a better product–deliver better service. To read the full letter, go to page 6.

Originally published in Canadian Insurance Business Magazine, January 2010.

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