Bristol County Savings Bank, Taunton
Taunton-based, $1.1 billion-asset Bristol County Savings Bank has bought a 51 percent interest in one of the region’s largest insurance agency this week – but it’s keeping insurance sales at arm’s length, the bank president says.
While the bank and the Farrell Backlund Insurance Agency wanted to grow their businesses, leaders for both said they’d seen too many bank-agency pairings crash and burn because of culture clashes and shaky implementation.
They’re avoiding that, they say, by keeping both entities relatively autonomous: Farrell Backlund, a four-office, 48-employee property/casualty agency, will keep its current management and organization structure in place.
The two companies will operate as more of a symbiotic referral network, rather than a blended entity, its principals said.
“Don’t fool yourself and think you’re an insurance agent,” said Bristol County Savings President Dennis Kelly, repeating advice the bank had followed as it explored its insurance options. “We do our business, they do their business, and we try to help one another out.”
Like many banks, Kelly said, Bristol County had looked to insurance products to help diversify its income. Interest income has been shrinking across the banking industry as the cost of doing business has risen, and Bristol was looking to find a local insurance agency that would be a new source of cash.
Bank-owned insurance brokerages have had a strong year: such brokerages had their second-highest quarter in the beginning of 2008, bringing in $1.08 billion this year compared to $993.3 million in the first quarter of 2007, according to research firm Michael White Assoc.
Insurance agencies in Massachusetts are also adapting to changing times, as the new managed competition auto insurance system will likely bring new competitors into the market. Many insurance agencies are looking to survive through consolidation, he said, and banks’ investment capital and customer base makes them a good option.
Russel Martorana, the agency’s president, said Farrell Backlund didn’t have managed competition fears specifically in mind when it agreed to the deal, but the changing auto insurance land-scape may have made this a fortuitous time to change.
The agency was attracted to the idea of working with a bank that wouldn’t micromanage, he said: “This bank gets it in that they realize they need insurance people running their operations.”
White said leaning on referral services can work, but only if a highly organized plan is in place to actually implement that back-and-forth arrangement.
Insurance agencies come from a sales culture; banks do not, he said. That means while insurance agencies are used to pitching products to clients, bank employees often have more trouble remembering to “sell” insurance products when dealing with customers.
Regulatory differences also create trouble. Insurance agencies can freely recommend any bank product they want, but banks are under stricter guidelines as to what they can and cannot say to customers. This type of organization has to be hammered out in detail, he said.
“You can’t just hope that it will happen,” he said. “You have to plan for it.”
