There are a handful of companies that offer insurance outsourcing services to banks, but InBank Services LLC is taking the opposite route-it hopes to supply insurers the means to offer private-label bank products."If you look at the insurance company banks out there, only a few are successful. The rest are struggling financially," said J.W. Coyne, InBank's founder and chief executive officer. InBank, he says, will enable insurers to offer all the banking services they want to make available to their customers-without any large capital outlay, higher level of risk, or increased regulatory scrutiny.
"It gives an insurance company a chance to appear more like a full-service financial services company, without having to take the time and expense," he says. InBank is in Alexandria, Va., but is looking for permanent offices elsewhere in the Washington, D.C. area.
InBank intends to spend a lot of time with its customers' agents, he says, visiting them at least once a month and teaching them how to translate a simple certificate of deposit sale into further cross-selling opportunities. In addition, the company will help train agents and insurers how to market their banking products to attract new customers into their offices.
The company intends to offer a full range of banking products such as CDs, money market accounts, credit cards, and loans.
"We're doing everything that most insurance companies want when they start or buy a bank," he explains. Unfortunately, he adds, many insurers interested in banking don't understand the downside of going it alone.
Most find "it's easy to get deposits through insurance agents but you can't generate assets or loans. You get one side of the balance sheet," he says.
The company has an operational affiliation with Affinity Financial Corp. an Irvine, Calif.-based company that offers private-label banking services to employers and affinity groups. Affinity is owned by the privately held Waterfield Group Inc. of Fort Wayne, Ind.
InBank supplies the technology and training and will take a licensing fee from its insurer clients; Affinity would handle the back-office processing and actually take the deposits and underwrite the loans. Insurers do not need to have a thrift or bank charter to work with InBank, Coyne says. The insurers will retain ownership of the customers.
For now InBank is looking to attract small life insurance companies as customers. But it hopes to target property/casualty companies in the future.
"They have a different structure, but they're the ones that are competing with Allstate and State Farm, so I think there'll be a market there," he says.
InBank has also been talking with companies that sell services to insurers, such as data services, about potentially developing joint products or doing joint sales calls, Coyne says.
Craig Whitehead, a senior consultant at Milliman USA, says he knows of no other company that is offering this kind of service to insurers.
"If it's true that clients tend to want things in one place, centered around where they get their advice, this makes as much sense as selling insurance through a bank," he says.
This article originally appeared in American Banker, another Thomson Media publication. It has been edited for this publication.
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