People's Bank is holding a good hand in the insurance business, but it is biding its time.
A year after buying the biggest property and casualty insurance agency in Connecticut, the $12 billion-asset bank has yet to make an full-blown insurance pitch to its customers.
People's doesn't want to rush into cross-selling products without first developing the right infrastructure, said David E. A. Carson, the bank's chief executive.
"We're not going to roll it out until the customer's first contact is a good customer service and underwriting contact," Mr. Carson said.
Mr. Carson is unusual among bank chief executives in that he once ran an insurance company. He captained Middlesex Mutual Assurance until 1983, when he took the helm at People's.
Under his watch, People's managed to survive a regional economic slump and build itself into a national credit card force, with $4 billion of receivables, which includes a presence in the United Kingdom.
Though People's has no plans for a nationwide insurance push, it has big plans for Connecticut. There it intends to begin a statewide campaign by the end of the year, said Barbara P. Johnson, a bank senior vice president and manager of People's insurance program.
The bank did not always plan to wait quite that long, Ms. Johnson said.
After buying Hartford-based R.C. Knox in July 1998, Mr. Carson said, the bank turned Knox's 85 agents loose on its staff, marketing homeowners and auto insurance in a program that was partly educational and partly a testing of the waters. Roughly a third of People's 3,800 staff members signed up, she said.
With that experience under its belt, People's decided to make its move in the Hartford area.
However, the success of the test led to a delay in planning a marketing rollout, Ms. Johnson said.
"We ran one small experiment and we nearly got buried in applications," Mr. Carson said.
The bank may have been a little zealous in its efforts, setting up a referral contest with a trip to Niagara Falls as the prize. Branch personnel really got behind the effort. Instead of the expected 20 or 30 referrals a day, more than 100 per day were logged, Ms. Johnson said. The volume caused Ms. Johnson to shut the program down three weeks into the six-week test.
With television commercials running in-state and brochures for homeowners and auto insurance being circulated, Connecticut residents are not unaware of People's insurance capabilities, said David A. Grossman, director of insurance and pensions at $1.6 billion-asset American Savings Bank in New Britain, Conn.
Mr. Grossman said deals like People's purchase of R.C. Knox have spurred other banks to look at insurance.
R.C. Knox has a broad menu of insurance products, which will be the backbone of the bank's new insurance effort.
But People's will continue to offer the low-cost savings bank life insurance that it has sold since 1942. Sold through 550 licensed branch employees, SBLI netted the bank $1 million in first-year premiums in 1998. That gave People's roughly 31% of the Connecticut SBLI market, making it the top bank seller of the product in the state.
"SBLI has been a great product," Mr. Carson said. "It's a narrow product but it's still a great start-up policy for young people."
Combined, People's and R.C. Knox had insurance revenues of $3.8 million in the first quarter, compared with $2.5 million in the fourth quarter.
People's employees who sell SBLI will not sell other insurance products, Ms. Johnson said.
For R.C. Knox, which built most of its book of business through a single office in Hartford, exposure to so many new customers is a challenge.
"It's an adjustment for us to be marketing to the masses," said John Byrnes, the president of R.C. Knox.
Mr. Byrnes admits he expected a quicker development of cross-selling. But he said the process is being refined.
Referrals made to R.C. Knox by the bank often lose something in the translation, he said. The bank's employees are not as experienced in assessing prospects as Knox agents and the nuances are rarely communicated, he said.
The best referral would put a customer expressing interest in immediate contact an R.C. Knox call-center employee, he said.
People's is experimenting with a video hook-up to one branch. A Knox employee answers questions and can lead a customer right up to the point where the application is supplied at the branch.
A slower approach is justified for a company like People's Bank that wants a wide-ranging program focused on customer needs, said Carmen F. Effron, a Westport, Conn.-based consultant who formerly led BankBoston's insurance initiative.
Banks that are trying to integrate insurance too quickly become absorbed by internal issues and have little time left to focus on customer need.
In laying the groundwork for a successful program, People's and R.C. Knox are not just targeting individuals. R.C. Knox has also started making sales calls on People's commercial customers. People's divided its branch network into five regions, each of which will have a dedicated Knox manager who will make joint sales calls and get to know bankers.
Fifty businesses have been approached, Ms. Johnson said. Commercial sales take time, she said, but two of the business are negotiating their insurance packages with the agency.
Being owned by a bank should help R.C. Knox build sales to small businesses, said Mary Ann Godbot, a consultant with Conning & Co. in Hartford.
It makes sense "because the business owner is linked to their banker more than the individual," she said.
As People's prepares for a general marketing campaign, Ms. Johnson said she has been busy building an insurance call center and overseeing implementation of a new software program that will help determine product suitability to a particular customer's situation.
And Ms. Johnson said she is considering other products that can be offered at the bank.
"Long-term care is one of the hottest products right now, but the decision about how we would market that has not been made yet," she said. That decision may come in the third quarter, she said.
R.C. Knox already sells auto, homeowners, property and casualty, life, and commercial insurance.
Despite the breadth of the program People's is building, insurance veteran Mr. Carson isn't predicting success just yet. He said People's must work hard to automate administrative processes and work to capture information cleanly.
As People's looks for the answers, he said, it won't move too quickly and jeopardize customer relationships over inadequate service.
