[LTPC-discussions] Banks selling insurance. Seems like a trend.
ltpc-disc@ltpcalums.com
ltpc-disc@ltpcalums.com
Sat, 5 Jul 2003 12:42:40 EDT
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LATEST NEWS
July 6, 2001
Banking, insurance prove a good match
A scant few years after banks and insurance agencies formally paired up,=20
Western New York bankers who took the plunge say the young marriage is worki=
ng=20
just fine.=20
=20
The lifting of decades-old restrictions on banks having their own in-house=20
insurance operations opened the door to many, including HSBC Bank USA, M&T B=
ank,=20
Evans National Bank and First Niagara Bank in the Buffalo area.=20
"We think it's gone quite well," says William Swan, chairman, president and=20
CEO of First Niagara, which acquired Amherst-based Warren-Hoffman & Associat=
es=20
in 1999.=20
"Insurance is very important to our bottom line. For the year 2000, First=20
Niagara Bank's total revenue was $92 million. Of that, non-interest income w=
as=20
$34 million (and) half of that figure, or $17 million, was from insurance=20
services and fees."=20
But, just as with most marriages between individuals, living together brings=
=20
challenges for businesses that decide to tie the knot.=20
Among the biggest hurdles for First Niagara as well as the financial service=
s=20
industry as a whole is educating their employees so they are understand both=
=20
ends of the business: Bank employees about insurance and insurance agency=20
employees about banking.=20
"Insurance is much more a sales organization than banking is, as much as I=20
would like to think that we are a sales organization," Swan says. "Banking h=
as a=20
ways to go in that regard."=20
Complicating the banking/insurance nuptial process is the fact that many=20
banks are opting to sell the full-range of insurance products. That means th=
eir=20
employees not only have to know about life insurance, but residential and=20
commercial property and casualty, employee benefits, disability, workers com=
p,=20
long-term health care, and more.=20
Some banks address the problem by keeping the insurance agency's work force=20
and retaining the executives after the agency is brought in-house as a=20
subsidiary.=20
Because the bank is retaining the insurance agency's expertise, some banks=20
also see this arrangement as being a confidence-builder for their customers.=
=20
"Because people have prior relationships, it does not mean that just because=
=20
a bank is now in insurance the customer will then buy from you or change the=
ir=20
insurance over," Swan says.=20
"We are doing it on a referral basis. We refer customers to Warren-Hoffman=20
and their people are actually selling and writing the policies for us," he s=
aid.=20
Other banks sell insurance through their branch office networks, sometimes=20
with bank employees who are especially trained in insurance matters.=20
Buffalo-based HSBC Bank USA claims to be the recognized standard-setter amon=
g=20
banks selling insurance. In 1999-2000, HSBC sold more insurance through its=20
426-branch network in New York state than any other bank in the country,=20
officials said.=20
About 1,700 HSBC branch office employees are licensed to sell life insurance=
.=20
When HSBC began selling insurance in the U.S. three-and- a-half years ago,=20
the number of insurance-trained employees was 80.=20
HSBC, whose parent is based in London, has been selling insurance directly=20
since starting in England about 15 years ago, says William Abdale, senior vi=
ce=20
president of HSBC Insurance Agency (USA), the bank's U.S. insurance operatio=
n.=20
"We literally imported the bank's insurance model that had proven so=20
successful for us in Europe. Since then, HSBC has become the largest seller=20=
of life=20
insurance of any bank in the U.S. by a significant margin," Abdale said.=20
In addition to heading HSBC's insurance unit, Abdale also serves as a=20
director and vice president of Financial Institutions Insurance Association,=
a San=20
Francisco-based organization of the world's largest banks selling insurance.=
=20
Abdale says the key factor in making a mixed marriage of a bank and insuranc=
e=20
agency work is "support from the highest levels of senior management. They=20
have to truly believe in the importance of insurance for the financial=20
institution."=20
M&T Bank, like HSBC, also sells its insurance products chiefly through branc=
h=20
offices, which in New York now totals 271.=20
"When we formed M&T Insurance Services in August 1997, we started selling=20
traditional insurance products -- life, long-term care disability -- primari=
ly=20
for individuals as opposed to groups -- through our bank distribution channe=
ls,"=20
said Timothy Brenner, administrative vice president at M&T Bank. Brenner's=20
responsibilities include insurance.=20
"For the first couple of years, it was much like a marriage. We were figurin=
g=20
out how to live together. We tested different distribution strategies and=20
listened to what customers were asking us to do," he said.=20
M&T acquired its first insurance agency in March 2000, Matthews, Bartlett &=20
Dedecker, which was a Buffalo property and casualty agency that focused=20
primarily on commercial accounts.=20
Bank insurance premiums are rising as more banks get into the business.=20
One of those institutions is Angola-based Evans National Bank, which last=20
fall bought M&W Group Inc., a retail property and casualty insurance agency,=
now=20
the bank's M&W Agency.=20
"It is working out wonderfully well," says bank president James Tilley. "The=
y=20
were a mirror image of ourselves philosophically on the insurance side."=20
While big banks sometimes opt to fold insurance units into their general=20
financial services operations, smaller banks sometimes use a different=20
arrangement.=20
Tompkins Trustco Inc., the Ithaca-based parent of The Bank of Castile and=20
banks in Ithaca and the Hudson Valley, has acquired insurance expertise thro=
ugh=20
the recent merger of two agencies to form Attica-based Tompkins Insurance=20
Agencies Inc.=20
Tompkins Insurance Agencies has six offices including Alden, Warsaw, Attica=20
and Batavia. The combined agencies have become a wholly-owned subsidiary of=20
Tompkins Trustco.=20
James Hardie, president and CEO of Tompkins Insurance, says that while=20
smaller community banks acquire insurance expertise the agencies benefit by=20=
being=20
able to use the banks' technology, branch system and larger customer bases.=20
Brenner, at M&T, cited an industry study which found that bank insurance=20
premiums grew by 18 percent from 1998 to 1999.=20
"In 1998, only 48 percent of banks sold general insurance. But in 1999, 78=20
percent sold general insurance," he said. "More banks are doing it and there=
are=20
more premiums."=20
In 1998, M&T had essentially a small insurance start-up operation, Brenner=20
said, selling less than 500 policies of all kinds. This year, a "few thousan=
d"=20
policies will be sold, as a relatively new revenue stream continues to grow=20=
for=20
the bank.=20
"We recently completed a life insurance policy that will pay us more than=20
$100,000 a year in premium," Brenner said.=20
=A9 2001 American City Business Journals Inc.
=20
=20
=20
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<HTML><FONT FACE=3Darial,helvetica><FONT SIZE=3D2 FAMILY=3D"SANSSERIF" FACE=
=3D"Arial" LANG=3D"0">LATEST NEWS<BR>
July 6, 2001<BR>
</FONT><FONT COLOR=3D"#000000" style=3D"BACKGROUND-COLOR: #ffffff" SIZE=3D6=
FAMILY=3D"SANSSERIF" FACE=3D"Arial" LANG=3D"0"><BR>
<BR>
<P ALIGN=3DCENTER><B>Banking, insurance prove a good match<BR>
<BR>
<P ALIGN=3DLEFT></FONT><FONT COLOR=3D"#000000" style=3D"BACKGROUND-COLOR: #=
ffffff" SIZE=3D3 FAMILY=3D"SERIF" FACE=3D"Times New Roman" LANG=3D"0"></B><B=
R>
<BR>
A scant few years after banks and insurance agencies formally paired up, Wes=
tern New York bankers who took the plunge say the young marriage is working=20=
just fine. <BR>
<BR>
<BR>
<BR>
<IMG SRC=3D"http://img.bizjournals.com/ads/dc/infoUSA/statebusiness2.gif" W=
IDTH=3D"300" HEIGHT=3D"250" BORDER=3D"0"> <BR>
<BR>
<BR>
The lifting of decades-old restrictions on banks having their own in-house i=
nsurance operations opened the door to many, including HSBC Bank USA, M&=
T Bank, Evans National Bank and First Niagara Bank in the Buffalo area. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"We think it's gone quite well," says William Swan, chairman, president and=20=
CEO of First Niagara, which acquired Amherst-based Warren-Hoffman & Asso=
ciates in 1999. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"Insurance is very important to our bottom line. For the year 2000, First Ni=
agara Bank's total revenue was $92 million. Of that, non-interest income was=
$34 million (and) half of that figure, or $17 million, was from insurance s=
ervices and fees." <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
But, just as with most marriages between individuals, living together brings=
challenges for businesses that decide to tie the knot. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Among the biggest hurdles for First Niagara as well as the financial service=
s industry as a whole is educating their employees so they are understand bo=
th ends of the business: Bank employees about insurance and insurance agency=
employees about banking. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"Insurance is much more a sales organization than banking is, as much as I w=
ould like to think that we are a sales organization," Swan says. "Banking ha=
s a ways to go in that regard." <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Complicating the banking/insurance nuptial process is the fact that many ban=
ks are opting to sell the full-range of insurance products. That means their=
employees not only have to know about life insurance, but residential and c=
ommercial property and casualty, employee benefits, disability, workers comp=
, long-term health care, and more. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Some banks address the problem by keeping the insurance agency's work force=20=
and retaining the executives after the agency is brought in-house as a subsi=
diary. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Because the bank is retaining the insurance agency's expertise, some banks a=
lso see this arrangement as being a confidence-builder for their customers.=20=
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"Because people have prior relationships, it does not mean that just because=
a bank is now in insurance the customer will then buy from you or change th=
eir insurance over," Swan says. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"We are doing it on a referral basis. We refer customers to Warren-Hoffman a=
nd their people are actually selling and writing the policies for us," he sa=
id. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Other banks sell insurance through their branch office networks, sometimes w=
ith bank employees who are especially trained in insurance matters. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Buffalo-based HSBC Bank USA claims to be the recognized standard-setter amon=
g banks selling insurance. In 1999-2000, HSBC sold more insurance through it=
s 426-branch network in New York state than any other bank in the country, o=
fficials said. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
About 1,700 HSBC branch office employees are licensed to sell life insurance=
. When HSBC began selling insurance in the U.S. three-and- a-half years ago,=
the number of insurance-trained employees was 80. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
HSBC, whose parent is based in London, has been selling insurance directly s=
ince starting in England about 15 years ago, says William Abdale, senior vic=
e president of HSBC Insurance Agency (USA), the bank's U.S. insurance operat=
ion. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"We literally imported the bank's insurance model that had proven so success=
ful for us in Europe. Since then, HSBC has become the largest seller of life=
insurance of any bank in the U.S. by a significant margin," Abdale said. <B=
R>
<BR>
<BR>
<BR>
<BR>
<BR>
In addition to heading HSBC's insurance unit, Abdale also serves as a direct=
or and vice president of Financial Institutions Insurance Association, a San=
Francisco-based organization of the world's largest banks selling insurance=
. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Abdale says the key factor in making a mixed marriage of a bank and insuranc=
e agency work is "support from the highest levels of senior management. They=
have to truly believe in the importance of insurance for the financial inst=
itution." <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
M&T Bank, like HSBC, also sells its insurance products chiefly through b=
ranch offices, which in New York now totals 271. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"When we formed M&T Insurance Services in August 1997, we started sellin=
g traditional insurance products -- life, long-term care disability -- prima=
rily for individuals as opposed to groups -- through our bank distribution c=
hannels," said Timothy Brenner, administrative vice president at M&T Ban=
k. Brenner's responsibilities include insurance. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"For the first couple of years, it was much like a marriage. We were figurin=
g out how to live together. We tested different distribution strategies and=20=
listened to what customers were asking us to do," he said. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
M&T acquired its first insurance agency in March 2000, Matthews, Bartlet=
t & Dedecker, which was a Buffalo property and casualty agency that focu=
sed primarily on commercial accounts. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Bank insurance premiums are rising as more banks get into the business. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
One of those institutions is Angola-based Evans National Bank, which last fa=
ll bought M&W Group Inc., a retail property and casualty insurance agenc=
y, now the bank's M&W Agency. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"It is working out wonderfully well," says bank president James Tilley. "The=
y were a mirror image of ourselves philosophically on the insurance side." <=
BR>
<BR>
<BR>
<BR>
<BR>
<BR>
While big banks sometimes opt to fold insurance units into their general fin=
ancial services operations, smaller banks sometimes use a different arrangem=
ent. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Tompkins Trustco Inc., the Ithaca-based parent of The Bank of Castile and ba=
nks in Ithaca and the Hudson Valley, has acquired insurance expertise throug=
h the recent merger of two agencies to form Attica-based Tompkins Insurance=20=
Agencies Inc. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Tompkins Insurance Agencies has six offices including Alden, Warsaw, Attica=20=
and Batavia. The combined agencies have become a wholly-owned subsidiary of=20=
Tompkins Trustco. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
James Hardie, president and CEO of Tompkins Insurance, says that while small=
er community banks acquire insurance expertise the agencies benefit by being=
able to use the banks' technology, branch system and larger customer bases.=
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
Brenner, at M&T, cited an industry study which found that bank insurance=
premiums grew by 18 percent from 1998 to 1999. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"In 1998, only 48 percent of banks sold general insurance. But in 1999, 78 p=
ercent sold general insurance," he said. "More banks are doing it and there=20=
are more premiums." <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
In 1998, M&T had essentially a small insurance start-up operation, Brenn=
er said, selling less than 500 policies of all kinds. This year, a "few thou=
sand" policies will be sold, as a relatively new revenue stream continues to=
grow for the bank. <BR>
<BR>
<BR>
<BR>
<BR>
<BR>
"We recently completed a life insurance policy that will pay us more than $1=
00,000 a year in premium," Brenner said. <BR>
<BR>
<BR>
<BR>
<BR>
</FONT><FONT COLOR=3D"#000000" style=3D"BACKGROUND-COLOR: #ffffff" SIZE=3D3=
FAMILY=3D"SANSSERIF" FACE=3D"Arial" LANG=3D"0"><BR>
<BR>
<I>=A9 2001 American City Business Journals Inc.</I><BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
</P></P></FONT></HTML>
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