Barnett in Insurance Forefront Again with Plans to Sell Property, Casualty
Plasencia, William, American Banker
When it comes to insurance, Barnett Banks Inc. wants to go where few banks have gone before: property and casualty coverage.
The Jacksonville, Fla.-based banking company wants to team up with one or more insurers to offer auto, homeowners, and long-term-care policies as well as more traditional life insurance, according to Richard Jones, Barnett's chief asset-management executive. Though the insurers would underwrite the policies, Barnett would market them to its customers in return for a slice of the profits.
Barnett has long been at the forefront of banks' struggle to sell insurance. Indeed, it was Barnett's challenge to Florida insurance law that led to the recent U.S. Supreme Court decision allowing banks to sell insurance from towns with populations of up to 5,000 people.
Now the bank is seeking to defy convention again. Property and casualty policies are more labor-intensive than the life insurance policies that most banks hawk. And, they carry significantly more risk.
"How can Barnett jump into this business and compete with a State Farm or an American Family?" asked Joseph A. Alberti, president of Firstar Insurance Services Inc., Milwaukee "They would eat (Barnett) alive."
But Mr. Jones, a former Fidelity Investments executive who arrived at Barnett via Fleet Financial Corp., doesn't see it that way.
Florida's insurance market has been devastated by several severe hurricanes in recent years, Mr. Jones explained. Forced to pay out hefty claims, many insurers have now been looking to limit their exposure in the state. That makes teaming with a well-capitalized institution like Barnett more appealing than it would have been in the past.
"This business will create a unique opportunity for us and help us have a constructive relationship with the insurance community," Mr. Jones said.
The property and casualty effort is part of a larger insurance push at Barnett that Mr. Jones outlined for attendees of a Consumer Banking Association symposium on investments in Washington last week.
Barnett plans to aggressively sell property and casualty, life and disability, long-term care, and workers compensation insurance to the 2.2 million Florida households with which it already does business, Mr. …