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Royal Bank of Canada is teaming up with one of the world's biggest insurance brokers to take another stride into the insurance game.

RBC Insurance, a subsidiary of this country's largest bank, has signed a deal with Aon Reed Stenhouse Inc., part of Chicago-based Aon Corp., in an attempt to offer businesses from gas stations and florists to major manufacturers one-stop shopping for their insurance needs.

With Aon acting as the broker, products from a range of insurers will be offered to businesses through Aon's 27 Canadian offices and a new call centre.

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RBC Insurance, as a type of intermediary, will earn fees and is also hoping to snag some banking business from companies that come seeking insurance.

It previously had only a very limited set of insurance products for businesses - such as group life and health insurance - and had been looking for a way to offer a full suite of products. It has decided to sell business insurance through a brokerage system for the first time.

"We're going to be the first Canadian bank-owned insurance company to offer business insurance solutions like property liability, business interruption, key person, overhead, crime, trade credit, commercial auto and so on, really using a single point of contact," said Neil Skelding, chief executive officer of RBC Insurance.

Because it's not manufacturing the insurance products that it will sell, it will not hold the insurance risk on its books.

In other countries, such banks as the Royal Bank of Scotland have agreements that allow them to offer clients a full range of business insurance products, an RBC Insurance spokeswoman noted.

"This is, we think, a breakthrough, game-changer type of agreement with Aon that will propel this business insurance strategy forward," Mr. Skelding said.

"I believe it is very innovative, in terms of opening up new channels to the Canadian consumer," said Chris Fawcus, CEO of Aon Reed Stenhouse.

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The deal came about after an Aon Reed employee who was attending an MBA program got talking to a classmate, and then asked Mr. Fawcus what he thought about talking to a financial institution to potentially become a distributor for it.

"I said, 'Take that conversation as far as it can possibly go,' and here we are today," Mr. Fawcus said. "What's exciting about this from our business perspective is that rather than the phone ringing twice a week, it's going to ring hopefully 50 times a week," he said.

RBC Insurance will begin advertising the concept shortly, but "in terms of how big it will get, we're not sure at this point," Mr. Skelding said.

Federal laws impose restrictions on Canada's big banks that prevent them from using their branches to market or sell most types of insurance. The limitations apply whether the banks are pitching products to individuals or business customers. While RBC has business bankers that often go out and visit with small companies, they are only allowed to provide general insurance advice, Mr. Skelding said.

The banks are allowed to own insurance subsidiaries, such as RBC Insurance, which can open separate offices. They can also market their products by phone, online and through the mail.

The restrictions only apply in one direction; the insurance locations are allowed to market RBC banking products.

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"This is something that we think will help attract new business to our business banking operations," Mr. Skelding said.

The call centre will provide solutions for small businesses that they might not have had access to in the past, and large companies if they choose to call in, he said.

ROYAL BANK OF CANADA (RY)

Close: $49.40, down 28¢

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