Culture War: Banks and Insurance Units

Article excerpt

When the chairman of an Evansville, Ind., bank assumed responsibility for a newly acquired insurance agency, he asked the agency's founder what role he should play.

According to William Vieth, chairman of Citizens National Bank, the advice delivered by insurance veteran Al Adams couldn't have been clearer:

"Keep the bankers away."

In a recent interview, Mr. Adams said he had been afraid the bankers would have too many meetings and leave the agency's sales force with too little time to promote insurance products.

"Bankers thrive on taking a vote to see what should be done," he said. "We're lean and mean and able to get things done quickly."

While Mr. Adams' words might strike some as stereotyping bankers unfairly, they underscore the cultural challenges that banks face as they build insurance business through the purchase of independent agencies.

Most often, the insurance agencies acquired by banks are small entrepreneurial companies. Agents are used to dealing with the pinstriped crowd as customers, not co-workers.

Mr. Vieth took Mr. Adams' words to heart. He tried to limit the number of meetings and asked only top executives to attend.

"We really did tread softly on trying to infiltrate our banking style on the organization," Mr. Vieth said. "At the same time, we now own the agency and have to know something about it."

When an insurance agency is bought by a bank, agents gain the security and support staff that are part of a large corporation.

The insurance agency founders, who often had done their own administrative work, are happy to pass on bookkeeping and human resources tasks to the bank's staff.

Comerica Insurance, a subsidiary of the Detroit-based banking company, pairs agents with administrative employees, who spend a year introducing them to the bank's reporting procedures.

"We don't want people coming into our organization saying, 'Wow, this is a big change. I don't know if I like this,' " said Comerica Insurance president Andrea Martin.

But insurance agents at many banks wince when asked to file reams of paperwork, join in lengthy policy discussions, or unravel corporate red tape.

"They tend to get very frustrated in that environment," said Kenneth Kehrer, a Princeton, N.J.-based bank insurance consultant.

Paid by commission, insurance agents usually view time spent in meetings as preventing them from selling insurance products and increasing their paychecks.

Insurance agents' salaries and commission structure usually parallel pay in the insurance industry rather than that of the bank holding company.

"We want them to make as many sales as possible," said H. …