Agents, Banks Search For Successful Formula
Given the inherent differences between the banking and insurance industry cultures, it is no wonder that many marriages among banks and independent agencies are off to a somewhat rocky start. Each side perhaps had overly optimistic expectations when they negotiated their joint venture or merger deals. Now the hard realities are setting in.
A culture clash was inevitable. For one thing, independent agents are entrepreneurs, while bankers by and large are a more cautious lot. For another, insurance and banking products are two very different breeds of financial services, especially on the property-casualty side.
In addition, the two sides fought bitterly for years in state and federal legislatures and the courts over the ground rules on insurance sales by banks. That battle is not yet over, as evidenced by the uproar among agents after the Office of the Comptroller of the Currency ruled this month that GLB preempts four provisions of a West Virginia law regulating bank insurance sales. More lawsuits loom.
Does this mean that bank-agent marriages are doomed to fail? Of course not. It's just going to take time for all the regulatory kinks to be worked out and the cultural differences reconciled.
The potential remains for both agents and banks in given situations to benefit tremendously from joint operating arrangements, either as independent partners or a merged entity.
The key lesson learned from our special report this week is this: regardless of the financial arrangement–joint venture or merger–each side must stick to what it knows best, while capitalizing on its partnership by referring business to each other. That seems to be the only proven formula for success.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 15, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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