Culture War: Banks And Insurance Units

When the chairman of an Evansville, Ind., bank assumed responsibility for a newly acquired insurance agency, he asked the agency's founder what role he should play.

According to William Vieth, chairman of Citizens National Bank, the advice delivered by insurance veteran Al Adams couldn't have been clearer:

"Keep the bankers away."

In a recent interview, Mr. Adams said he had been afraid the bankers would have too many meetings and leave the agency's sales force with too little time to promote insurance products.

"Bankers thrive on taking a vote to see what should be done," he said. "We're lean and mean and able to get things done quickly."

While Mr. Adams' words might strike some as stereotyping bankers unfairly, they underscore the cultural challenges that banks face as they build insurance business through the purchase of independent agencies.

Most often, the insurance agencies acquired by banks are small entrepreneurial companies. Agents are used to dealing with the pinstriped crowd as customers, not co-workers.

Mr. Vieth took Mr. Adams' words to heart. He tried to limit the number of meetings and asked only top executives to attend.

"We really did tread softly on trying to infiltrate our banking style on the organization," Mr. Vieth said. "At the same time, we now own the agency and have to know something about it."

When an insurance agency is bought by a bank, agents gain the security and support staff that are part of a large corporation.

The insurance agency founders, who often had done their own administrative work, are happy to pass on bookkeeping and human resources tasks to the bank's staff.

Comerica Insurance, a subsidiary of the Detroit-based banking company, pairs agents with administrative employees, who spend a year introducing them to the bank's reporting procedures.

"We don't want people coming into our organization saying, 'Wow, this is a big change. I don't know if I like this,' " said Comerica Insurance president Andrea Martin.

But insurance agents at many banks wince when asked to file reams of paperwork, join in lengthy policy discussions, or unravel corporate red tape.

"They tend to get very frustrated in that environment," said Kenneth Kehrer, a Princeton, N.J.-based bank insurance consultant.

Paid by commission, insurance agents usually view time spent in meetings as preventing them from selling insurance products and increasing their paychecks.

Insurance agents' salaries and commission structure usually parallel pay in the insurance industry rather than that of the bank holding company.

"We want them to make as many sales as possible," said H. Wade Reece, Branch Banking and Trust Co. executive vice president and president of BB&T Insurance Services.

To combat agents' conference-room claustrophobia, BB&T Insurance switched from monthly to quarterly meetings and uses memos or conferences calls to communicate.

When BB&T's parent, Winston-Salem, N.C.-based Southern National Corp. announced plans to buy United Carolina Bancshares, the company distributed a 30-minute videotape to all offices.

Mr. Reece, working from a Columbia, S.C., agency BB&T Insurance plans to acquire, led a conference call with his staff of 250 in 27 offices.

"When you pull somebody into a meeting," he said, "you are potentially taking money out of their paycheck, and you have to respect that."

Banks should blend their focus on strategic planning with the insurance agency's entrepreneurial drive, said Larry Renfro of Allmerica Financial Institutional Services, an underwriter that supplies banks with insurance products.

"There needs to be more structure to how a small business approaches its sales," Mr. Renfro said, "but on the other hand, if you spend all your time in meetings, you don't make many sales."

Executives hope the sales drive exhibited by insurance agents will infect the bank's business development officers. But agents say bankers tend to cling to their staid techniques.

In turn, bankers say they build deeper relationships with customers because they sell more than one financial product.

Insurance agents can be fiercely protective of their relationships with clients and sometimes hesitate to let them speak with bank officers.

"Agents just fight like tigers to keep their business because it directly affects their paychecks," Mr. Vieth said. "If we lose an account at the bank, we still get paid."

Agents sometimes worry that a client will go elsewhere for insurance if the bank rejects a loan application, and consequently they hesitate to introduce their customers to lending officers.

"You really have to trust each other and approach it as a team," said BB&T's Mr. Reece.

To reduce internal conflicts, BB&T has team-building seminars and participates in Outward Bound-style outdoor activities to build relationships among employees.

When employees start such activities as falling backward and relying on their colleagues to catch them, they feel as though they have nothing in common. But trust grows.

"At first, it's just a group of people that work for the same company," Mr. Reece said. "By the time you get to climbing trees and hanging from ropes, you get a lot closer."

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