It is going on three years since the Gramm-Leach-Bliley Financial Services Modernization Act became a reality, opening the doors to both insurers and bankers to begin providing those services that were pretty much off-limits since the depths of the Depression in the 1930s.
However, only a few players, relatively speaking, have begun doing business in each other’s backyards. Banks continue to acquire agencies and insurance brokers, while insurance associations and a few individual carriers have waded into the banking market.
The result, observers say, is a combination of excitement about the future, tempered by slight disappointment over the speed of progress, attributable to the inevitable learning curve.
“It has been an educational experience,” according to David T. Fronek, president and CEO of Assurance Partners Bank, the savings bank of the National Association of Mutual Insurance Companies in Indianapolis.
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“I think bank entities related to insurance companies have not seen the level of growth and participation they thought they would before Gramm-Leach-Bliley,” he adds.
Since last April, the Independent Insurance Agents of Americas banking subsidiary, InsurBanc, has been steadily working to contract agents in Connecticut, New Jersey and Massachusetts, according to Michael Herlihy, the bank’s CEO.
InsurBanc has 100 agencies contracted to help distribute the banks services to individual consumers in the three states, and has trained about 250 agents in cross-selling bank products, says Herlihy. “We’re fairly pleased, to very pleased with these numbers,” he notes.
In addition to doing consumer business via agents in the three states, the bank is also doing commercial business with Big I affiliated associations in all 50 states and the District of Columbia, Herlihy says. The bank, which has roughly $14 million in assets, he notes, is looking to grow by $30 million this year to triple in size to some $44 million.
He says there might be entry into the consumer market in additional states in the second half of this year. “We want to get everything firing on all cylinders before moving into more states,” Herlihy observes.
Assets at NAMIC’s Assurance Partners Bank, based in Carmel, Ind., total $17 million, with the bank looking to double that this year, says Fronek.
The bank currently has 275 agencies and 29 insurance companies signed up to provide commercial lending, consumer auto and home loans, he says. Although it can do business in all 50 states, it is limiting its reach to 19 states in the Northeast and Midwest, to avoid growing too big, too fast, Fronek notes.