Banks and Insurance: Strategic Alliances Emerge in the Market

Strategic Insights -

Industry speakers at a recent conference in New York, co-sponsored by Towers Perrin, Tillinghast, American Banker newspaper and A.M. Best Co., highlighted the growing trend of banks and insurance companies forming mutually beneficial alliances. As competition intensifies among banks and non-banks, selling insurance products through banks has emerged as a strategic and efficient solution for both insurers and banks. Michael R. Tuohy, Managing Director of Tillinghast, emphasized the significant dollars to be made in insurance sales, which few institutions can afford to ignore. However, cultural differences between insurers and bankers pose a significant challenge to successful partnerships.

Key Takeaways:

  • Many insurance companies are interested in implementing programs to sell insurance through banks, but face the challenge of cultural differences between insurers and bankers.
  • Bridging the cultural gaps between insurers and bankers is crucial for the success of these partnerships, as seen in the case of Lloyds bank's insurance retailing efforts.
  • Bankers and insurance agents must adopt different mindsets to be successful in insurance sales, requiring proactive pursuit of sales and a customer-oriented marketing approach.
  • The experience of UK bancassurers is encouraging for US banks, with bancassurers writing 14% of new business in the life insurance market and achieving higher sales productivity per representative.
  • U.S. banks are looking to enter the insurance marketplace, with some analysts predicting that bancassurers may hold up to 50% of the total market share by the year 2000.

Statistics:

  • 14% of new business in the life insurance market was written by bancassurers in the UK in the last year.
  • Bancassurers in the UK achieved sales productivity per representative that is four times the life industry average.
  • 50 of the top Fortune-ranked commercial banks and a significant number of top-ranked diversified financial and savings institutions served by Towers Perrin.

Sources:

  • Business Wire, May 31, 1995
  • "Banks and Insurance: Business Positioning Opportunities After VALIC" conference
  • Towers Perrin
  • Tillinghast
  • American Banker newspaper
  • A.M. Best Co.