October 11, 2009

So What If Banks Sell/Promote Insurance Online?

I used to like to go to work but they shut it down.
I got a right to go to work but there's no work here to be found.
Yes and they say we're gonna have to pay what's owed.
We're gonna have to reap from some seed that's been sowed.
--- Dire Straits,
Telegraph Road

Canadian banks dominate the sectors they enter.
  • Trust companies? Gobble, gobble.
  • Investment dealers? Gobble, gobble.
  • Mutual fund distribution? Gobble, gobble.
  • Mortgage loans? Gobble, gobble
Is insurance next?

Banks can't sell or promote insurance in their branches. Four months ago, the Office of the Superintendent of Financial Institutions (OSFI) ruled that a website isn't a branch. So banks can sell/promote online. Banks quickly integrated insurance into their main bank websites. This week, OSFI's boss, Finance Minister Jim Flaherty said banks can't market or sell online. What this means isn't clear. This reversal shows the power of insurance advisors in lobbying their local politicians.

Banks already play a key part in the insurance world. They own insurance companies. They sell insurance products from various companies. They have insurance offices close to bank branches.

What Do You Think of Banks?
According to research released by advisors, 59% of Canadians are "concerned about banks becoming bigger if they are allowed to expand into other businesses such as selling life and health insurance from their branches." This study ignores the Internet.

According to research just released by the banks, 77% of Canadians have a favourable impression of banks because "they receive good, personal service, have no problems with their bank and that their bank is there for its customers’ needs".

Do the findings surprise you?

What If ...
Let's suppose banks can sell and market insurance online in the near future. How can small independent advisors survive?

Would consumers really buy insurance online? Maybe not, but that's not the point. We research online. Maybe you'd buy from the place that educated you.

Look at all the industries battered by the Internet, mega competitors and changing consumer tastes
  • Home Depot vs small hardware stores
  • Superstores vs small grocery stores
  • Best Buy and Future Shop vs small home entertainment stores
  • Wal-Mart Supercenters vs department stores and grocery stores
Consumers picked the winners with their wallets.

Manic Sunday
To protect small operators, big stores could not open on Sunday or the day after Christmas. Consumers spoke and the laws changed. Big means mass market, which leaves many unserved niches waiting for you.

A Simple Idea
Here's a simple idea: fish where the fish are. Since consumers look for insurance online, get online too. This is easy and inexpensive. With a good website, you will attract traffic. As a minimum, you must show up on search engines. You'll find earlier posts help make you easy to find and credible.
You can't tell the future but you can plant and nurture the seeds of your success. You've always got competition but you can adapt. No matter what happens.



  1. There is no question that consumers will and currently do conduct research online. Your question is will they buy online, but a better question is WHAT will they buy online and for what products will they seek further advice? Will they buy UL or GMWB plans online? I think not, but simple, lower premium - yes. The alternate question is will advisors give advice and sell simple low premium, low face amount products to inquiring consumers? If not, maybe consumers should just go ahead and buy online once they have completed their research.

  2. Great points. Thanks for your comments, Byren.