Don Stewart, chief executive officer of the Toronto life insurer, told investors at the company's annual meeting that the prohibition helps to maintain choice for consumers, and alleviates concerns that the banks might use private customer data to make sales.

"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," he said.

Mr. Stewart declined to explain how keeping banks out of the business actually produced more choice for Canadians, and would not say what threats independent brokers might face if banks were allowed to sell insurance directly and make referrals.

Sun Life's tentative lobbying stands in contrast to rival Manulife Financial Corp., which warned last week that some of the legislative changes sought by the banks are "fraught with hazard." Manulife CEO Dominic D'Alessandro said easing restrictions could raise concerns about tied selling, and also potentially threaten the livelihoods of insurance brokers.

Both the banks and the insurers are escalating their rhetoric as the deadline approaches for the federal government to update its financial services legislation this year.

Royal Bank of Canada CEO Gordon Nixon has been among the most vocal proponents of loosening the rules, and used his company's annual meeting to make his case for evening the playing field with insurers.

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