Magazine article American Banker

Insurance: Agency Alliances Seen Gaining on Buyouts

Magazine article American Banker

Insurance: Agency Alliances Seen Gaining on Buyouts

Article excerpt

In a break with its own tradition, Comerica Inc. has teamed up with an insurance agency instead of buying it.

Last week the $36 billion-asset Detroit banking company announced that American Direct Business Insurance, Windsor, Conn., had agreed to market insurance to the bank's smallest commercial customers.

Comerica is not alone in establishing such alliances with brokers. BankAmerica Corp. and Chase Manhattan Corp. are among those that have opted for marketing agreements with property and casualty brokers or underwriters who sell directly to bank customers.

"You will absolutely see more of this," said Andrea Martin, president of Comerica's insurance operation.

A recent study of banks' insurance sales efforts and strategies supports her prediction.

The study, done by Risk Management Associates for the American Bankers Association and the Independent Insurance Agents of America, found that 41% of 307 banks contemplating entering the insurance business preferred forming joint ventures with agencies.

Thirty-five percent preferred acquisitions; 17% preferred direct deals with an underwriter; and 7% had other approaches.

Ms. Martin, who has overseen several acquisitions that have helped Comerica develop one of the most ambitious bank insurance programs in the country, says that developing a face-to-face insurance sales force is best achieved by buying established agencies with seasoned salespeople.

But she favors joint ventures in most cases in which products are best sold by phone. …

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