ABA Banking Journal - September 2007 - (Page 48)

INSURANCE SALES Group, Inc., sold its three insurance brokerages to Chicago-based Hub Insurance. Yet, in a trend-defying move, North Carolina-based BB&T announced over the summer that it plans to enter full-scale underwriting by opening American Coastal Insurance Company in Hollywood, Fla. What’s behind the volatility? One executive, who asked not to be named, put it this way: “There have been cases where banks acquired agents, only to have carriers drop that agent as a distributor. Some smart insurance carriers have attempted to fight back by creating product especially for the BHC-owned agency. It’s done to placate, but you’ll notice they don’t offer the flagship product for that agency.” Another also said on a notfor-attribution basis that insurance companies may snap up the right sort of bank. Or, they might seek to private label traditional bank products, being their own brand of universal provider. He sees the insurance carriers, not banks, being the big post-GLB winners of the financial super market sweepstakes. “Banks have figured out they don’t want to own risk,” says Bill Bradway, managing director of Bradway Research, Framingham, Mass. “They’ve focused instead on picking up middlemen and becoming distributors.” While performance is still spotty, with doers and “also rans,” banks in aggregate have demonstrated a knack with commercial P&C lines and workman’s compensation or specialty lines. such as investment fee income, mutual fund and annuity revenues. The biggest players accounted for $11.97 billion or 98.6% of that total. Top performers included such marquee names as Ill.-based HSBC North America Holdings Inc. and Calif.-based Countrywide Financial. Yet, the giants weren’t the only ones who made gains. Growth in sales also occurred in the broader over-$10 billion asset class, which experienced 12.2% growth, and among providers in the asset class of $1 to $10 billion, which grew insurance fee income 10.9%. And, better than two in three, or 66.8%, top tier or regulatory Eastern Bank: Cooperative sales culture allows sales in “context” When asked to describe a core competency that makes $6.5 billion-assets, Boston-based Eastern Bank so successful at insurance sales, bank president Bob Rivers said: “Our ability to provide product recommendations in context.” By this Rivers means the ability of Eastern to sell coverage with a total asset picture and comprehensive strategy in mind. Subsidiary Eastern Insurance Group works with the bank, not against it. “Insurance selling really shouldn’t be transactional,” says Rivers. The philosophy of context seems to be working. Last year, Eastern generated $38.5 million in brokerage fee income, up 7.5%, which made it among the top five producers among providers in the $1-$10 billion asset category according to Michael White Associates. Although the organization has grown by acquisition, with Eastern picking up four agencies in 2006 for a total of 18 locations in Eastern and Central Massachusetts, the organization has worked hard to get systems integrated. And, in terms of business operations, sticking to silos just isn’t an option. “We believe in using a team approach,” Rivers explains, noting that his company has created for both personal and commercial lines, in effect, a “home office” approach to management. Basically, a lead relationship manager taps many different insurance experts to evaluate a client situation and help on the sale. Rivers says that, in terms of retail, selling insurance has been an integral part of providing wealth management services. “It’s not an afterthought.” Real estate lending is one key niche for the bank that has led to insurance sales in the areas of workmen’s compensation, commercial property, and general liability/umbrella areas, among others. Rivers indicates that Eastern engaged in a renewal of focus last year, which he describes not as a changing of duties but a shifting of mindset. Greater emphasis was placed on managing the customer experience. More than ever, Eastern agents and relationship managers act as advisors, helping clients achieve asset management goals over time. It’s more of a lifecycle approach to selling, Rivers notes. Adoption of a supermarket of sorts—one stuffed to the gills with product—has also contributed to the bottom line. “We give clients options,” he says, admitting that while the universal model was highly touted when banks first got into insurance, he’s seen relatively few of the bank’s peers do well with the approach so far. Rivers indicates that solid information technology management and strong customer relationship management roots have helped the organization generate accurate, useable customer records that support life-cycle, or life-stage, selling. “We not only have a profile, but we keep track of transactions and customer service history,” he explains. Following through on key CRM-related automation has helped the bank step up cross sales. “We populated databases from the daily workflow of agent and relationship manager activity and made sure that there were clean linkages from front to back office,” says Rivers. “We want to work in a coordinated way that allows timely referrals and specialist input to be the norm for the best possible customer experience.” Reading the ABIA numbers Banks as targeted distributors was a key theme in the latest addition of an annual report published jointly on behalf of the American Bankers Insurance Association, an ABA affiliate, by Michael White and Seattle-based Symetra Financial, a provider of retirement- and employee benefit-plans as well as life insurance and annuities. Examining trends in fee income for the sixth year, the report notes that although total insurance revenue was slightly down from $44.1 billion to $43.5 billion in 2006, brokerage fee income was up 10.6% where BHCs earned a record $12.13 billion. (This compares with fee income of $4.99 billion in 2001.) Fee income is defined in the ABIA report as coming from brokerage commission and/or underwriting income, as well as by non-insurance related sources 48 SEPTEMBER 2007/ABA BANKING JOURNAL www.ababj.com/subscribe.html http://www.bbt.com http://www.hsbc.com http://www.hsbc.com http://my.countrywide.com https://www.easternbank.com http://www.easterninsurance.com/ http://www.symetra.com http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - September 2007

Contents Editor's Column Briefing: Why Money Sense is a Top Priority Briefing: Sleight of Mind Briefing: Snapshot: What the First Half Tells Us About the Second Half Briefing: ABA Resources ABA Chairman’s Position Briefing: Get Away and Get Ahead: ABA's Banking Leaders Forum Community Banking: Trim the Fat: Winning the "Battle of the Buck" Community Banking: Pass the Aspirin Cover Story: Meeting the Challenge of the "Unbanked" Bank Marketing: Don't Miss the Boom! On the Job: Time to Power Up Your Presentations? Insurance Sales: The Art & Craft of Cross Selling Tech Topics: The Price is Right? Tech Topics: Security: Protect Information First Tech Topics: Hackers for Hire? You Bet'cha Tech Topics: Case in Point: Tellers Scan, Too, at First Federal Compliance Clinic: Adverse Action Clarified The Economy Banker’s Mart To Advertise/Index of Advertisers

ABA Banking Journal - September 2007

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