Banks

While many life insurance agents were willing to lobby full-time against banks selling insurance, the reality of banks in the life insurance business is becoming more apparent each day. As this report was prepared, a case was cited in favor of the banks who had formed a joint venture with a life insurance agent to market financial planning out of the bank. Although the case may be appealed, the trend is gaining momentum.

Many life insurance agents are positioning themselves for venture with the banking industry for many reasons.

As is found in property casualty relationships, agents forming ventures with banks find an endless stream of prospects. Because people are used to going to the bank to conduct their business, it seems to be a logical progression that they stop in the financial planning office to find out how they can improve financial affairs. Early indications are that the bank customers are crying for this type of assistance. Although the nature of the planning may be repetitious in nature, it is providing some efficiencies and profitability to encourage banks and life insurance agents to seek changes in current law.

It appears as though the agent must possess a high degree of entrepreneurial drive to make a venture like this work. This area of life insurance distribution is viewed by many as a threat to our traditional methods of doing business. Others feel that it is time to position themselves to make sure that the insurance companies do not cut the agent out of the market. Still others see an opportunity to market their products through an arrangement that will tie the banks to the insurance agent.

Some agents have been able to lease space from the bank and open up an agency in the lobby. The agent is in a position of marketing insurance products directly to the bank’s clients and the bank is benefiting from leasing the space at a base rent and getting a percentage of gross sales.