Since the 1999 adoption of the Gramm-Leach-Bliley Act, agents have explored opportunities for selling financial services that could be easily incorporated within their insurance portfolios.The search has often been futile as agents viewed the technology and training expenses as too costly, or the program was a poor fit within their operations. But in November, Alexandria, Va.-based Independent Insurance Agents of America (IIAA) unveiled a full-service federal savings bank program, named InsureBanc, that's designed specifically for independent agents.
Expected to be launched this spring in three East Coast states-New Jersey, Connecticut and Massachusetts-InsurBanc initially will be offered to 3,000 "Big I" agents to market bank and loan products to its existing base of consumer and commercial customers.
Although InsurBanc's headquarters will be based in Farmington, Conn., there are no plans to offer customers physical access to the facility. Rather, all transactions will be processed through agents via the Internet, telephone or fax.
The technology expense for agents to launch the program is minimal-requiring an Internet connection and a Web browser.
"Agents have found scouting for financial service ventures to be a round-hole, square-peg experience," says Michael Herlihy, CEO of InsurBanc, who is a former executive for Connecticut Bank & Trust. "We've sculpted InsurBanc to be designed for the agent, with the Internet serving as the focal distribution channel for consumer and commercial transactions."
Branching out
Before it can sell a single product, InsurBanc must meet regulatory guidelines spelled out by the Office of Thrift Supervision and the Federal Deposit Insurance Corp.
Although InsurBanc appears to have several innovative and agent-friendly qualities, those attributes won't automatically attract agents to the program, says James Luscombe, a consultant for New York-based PricewaterhouseCoopers.
"If an agent markets property/casualty products, they probably don't market life insurance products," Luscombe explains. "So, if agents are specialists, I wonder what would motivate them to embark on a radically new selling program-bank products and loans."
Low risk
InsurBanc officials anticipate that many agents will gravitate toward the program because it represents a low-risk and inexpensive addition to their operations.
"Because it's 100% Web-based, agents won't have to invest in software, middleware or ongoing training," Herlihy explains. "They'll basically have to pay for licenses on a state-by-state basis-for instance, obtaining a mortgage broker license in Connecticut."
Because agents will assume the role of a "referral manager," Herlihy says they can avoid the expense of linking an agency management system to an InsurBanc data base.
For instance, when a customer inquires about bank or loan products, an agent can download an application from www.insurbanc.com and e-mail it to the customer, who can then fax or e-mail it back to the agent.
When a transaction is completed, the producing agent will receive an unspecified commission from InsurBanc.
Unlike with insurance products where an agent/carrier interface provides agents with electronic access to policy data, agents are barred from obtaining access to InsurBanc customer account balances and transaction histories.
Going forward, Herlihy says the launch of InsurBanc will enable consumers to consolidate insurance, loans and banking needs within one entity.
"The agent will truly be able to implement their customer relationship management and product bundling skills," he says.
