The federal government should maintain the current rules limiting insurance marketing by Canada's biggest banks, says the chief executive of Sun Life Financial.

Donald Stewart spoke at the firm's annual meeting wading into the contentious debate about competition in the country's booming financial services sector.

"We commend Canada's new government on the clarity of their election platform, which stated explicitly that 'a Conservative government will maintain the current regulations governing insurance marketing by the chartered banks,' " Stewart told stockholders.

"The current rules foster a more diverse, competitive financial services market and prevent banks from using the highly detailed personal information on their databases to market life and health insurance products within bank branches."

Canadian banks have renewed their push to market insurance in branches as the government reviews its financial services legislation.

At present, banks can own insurance operations, advertise them and sell policies to consumers who contact them by telephone or the Internet. But they are prohibited from even displaying an insurance brochure in a branch and branch staff are forbidden to provide insurance information or refer clients to insurance agents.

The Canadian Bankers Association has called the restrictions "archaic," arguing they work against the interests of consumers.

Earlier this year, the CBA released the results of a poll by The Strategic Counsel which found that 91 per cent of consumers agreed that having as many choices as possible for information about insurance products, including bank branches, is a "good idea."

But critics, including the Insurance Brokers Association of Canada, have also expressed concerns about banks being able to access consumer credit information when issuing an insurance quote.

"Would you really want to be in a position where the banks know more information about you and be able to offer you those products when you are vulnerable?" commented CEO Dan Danyluk.

As for Stewart, he said the current rules "support the role of independent insurance advisers in maintaining choices for Canadians in a country that has the world's second most concentrated bank sector."

His comments echoed the views of Dominic D'Alessandro, CEO of Manulife Financial Corp. who said that he too doesn't see any great advantage in changing the rules.

But at least one shareholder, Robert Verdun, suggested that Sun Life is becoming proportionally less a life insurance company and more a financial services firm, noting that premium income from life insurance has declined between 2003 and 2005.

"Then your argument to keep banks out of insurance becomes progressively weaker," he told Stewart.

When asked by a reporter why Sun Life sees no conflict in using Indian banks to promote their insurance products in that country, Stewart said the company operates its business in accordance with local customs. "India is a very different country . . . In financial services it doesn't resemble Canada in any manner."

Looking ahead, Stewart said the firm is scouting for more international acquisitions. He also highlighted the need for Ottawa to increase Canada's focus on service sectors, take a leadership role in the WTO negotiations and build broader strategic relations with India and China.

Chartered in 1865, Sun Life is an international financial services organization with operations in Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda.

(www.cbc.ca)