Royal Bank of Canada is to launch a new insurance operation in its domestic market having found a novel way to overcome laws preventing the sale of insurance products in its bank branches.
The Canadian bank is literally to start up its insurance operation on the side by opening a retail outlet next to one of its banking branches in Scarborough.
The insurance branch, the first of Royal Bank’s RBC Insurance division and the first retail insurance operation in Canada, will use its position next to an established Royal Bank banking outlet to ensure that customers are able to take advantage of the financial services organization’s duel offering without breaking Canada’s Bank Act.
The Bank Act is due to be reviewed in October next year at which time Canada’s banking industry will push for a change in the law which would render insurance branches obsolete. However, until a change comes Royal Bank’s neighboring branches in Scarborough will have to operate under the current restrictions that create the peculiar situation in which staff in the insurance branch can refer customers next door but staff in the bank branch are prohibited from returning the favor.
Royal Bank plans to open a further four insurance locations this year with the long term goal of achieving 100 retail sites.