Distribution

For many consumer-goods providers, one-stop shopping has long been regarded as the pinnacle of customer relationship management (CRM). But some have learned that offering one-stop shopping-as all encompassing as it can be-comes equipped with complications.In their zeal to become all things to all people, a host of consumer-goods providers lost their overall focus, and in turn alienated customers. Insurance companies that have established a bank over the past four years have found this dilemma to be more imagined than real.

Although insurers may be tempted to offer the full gamut of banking products and services, there are a finite number of products and services that consumers will acquire-with confidence-from insurance companies, industry observers say."A certificate of deposit (CD) with a locally available rate is very attractive," says Mark Walker, group vice president, financial services business team leader, at Walker Information Inc., an Indianapolis-based firm specializing in customer loyalty.

If Lee Gaudette, a third-generation independent agent based in Worcester, Mass., had a nickel for all the good reasons he doesn't sell banking products to his customers, he could probably open his own bank.Gaudette's sentiments are motivated by several factors, among them tradition, geography and competition. That's why Gaudette uses Insurebanc, a Farmington, Conn.-based federal savings bank established jointly by the Independent Insurance Agents & Brokers of America (IIABA) and W.R. Berkley Corp., for his own cash management purposes and for various loan products.

Although many insurers are taking the necessary steps internally to grow their books of business, many realize that they need to look outward and align with third-party distribution channels that have developed their own internal IT competencies.The impetus to raise the stakes on small-business insurance marketing is significant because no single carrier has more than 3%-4% share of market, says Ed Gillman, president and CEO of AgentSecure, an Atlanta-based insurance agency serving the small-business market.

In May 2001, eWausau.com, the Web property serving small-business customers developed by Wausau, Wis.-based Wausau Insurance, was shut down after executives at the company realized that small-business owners were reluctant to use the Web to research and shop for insurance.The company shut down on the heels of consummating a strategic alliance with Atlanta-based InsureZone, a partnership that would expose eWausau to even greater distribution opportunities than it could muster alone. But eWausau is now gone, and InsureZone-a startup provider at the time-carries on the legacy.

For years, Hispanic consumers have had to settle for "Americanized" versions of a wide variety of consumer goods-financial services products included. But as the Hispanic population in the U.S. rapidly ascends, industry experts insist that insurers must adopt new selling strategies to fully capitalize on a ripe opportunity.By the year 2025, Latinos are expected to represent the largest minority group in the United States. And, as this growth emerges, some insurers have begun to customize products to meet the needs of this burgeoning ethnic demographic group.

Last year, for the first time, more than 50% of banks in the United States produced some sort of insurance revenue.According to a "Bank Insurance Fee Income Report" from Michael White Associates, 4,359, or 52%, of all commercial banks or federally insured savings banks in the United States generated revenues through insurance sales.

The Hartford's affinity program with the AARP is a direct-marketing success story. However, the technology supporting the program is the secret to the carrier's achievement.In 1984, the American Association of Retired Persons (AARP) approached The Hartford for a third-party affinity relationship that would enable AARP members to purchase auto and home insurance from the carrier.

In response to how Allstate Insurance Co. handled its employee-agents during its reorganization in 1999 and 2000-and to prevent other employers from repeating that action-the Employee Benefits Protection Act of 2003 was introduced in Congress in March.The Northbrook, Ill.-based carrier reorganized the company to reduce expenses by $600 million annually, to bring its agents under one program, and to integrate its agency force, direct response call centers, and the Internet. As part of that plan, Allstate terminated 6,400 employee-agents in June 2000, and offered them the option to convert to independent contractor status.

Most insurance e-business solutions providers have long considered investments in Web-based insurance distribution outlets as bold and risk-taking strategies to enhance their corporate fortunes.This belief didn't deter Brookfield, Wis.-based Fiserv Inc., an information management systems and services provider, from acquiring Falls Church, Va.-based ReliaQuote Inc., an Internet-based insurance agency and brokerage that dabbles in term insurance. Consummated in April, the terms of the deal were not disclosed.