The president of the insurance subsidiary of First Bank System Inc. has resigned to take an executive position with a company that helps banks run their insurance programs.
Michael P. Moran, who came to the Minneapolis-based bank in 1994, has joined PAS Financial Group Inc., Dallas, as president. Part of Mr. Moran's job will be to help the company, which has 1,200 community bank and credit union clients, acquire large bank clients.
But given banks' interest in insurance, the job shouldn't be too hard, the 42-year-old insurance veteran said. "We don't even have to go to them. Money-center banks are coming to us."
PAS specializes in helping banks set up programs where they sell term insurance policies by the mail. The banks hand over their customer list and insurance companies underwrite the policies, but PAS markets the policies, processes claims, and helps banks understand related regulations.
Mr. Moran's new company is touting a product called LifeStyle, a term policy with practically no underwriting requirements. He says such simplified policies are the wave of the future in banks, because they are so easy to sell.
Applicants qualify for up to $100,000 in insurance with the LifeStyle product as long as they sign a "statement of good health." No physical examination is required.
But some are skeptical these types of products will work at a bank. Their coverage is limited, and they tend to reach customers that can't afford much in premiums-which means the commissions the bank makes are much lower than on most products.
"A lot of banks are going in this direction," said insurance consultant Kenneth Kehrer, Princeton, N.J., "but it's hard to imagine these policies are going to mean big bucks to banks."
First Bank System has appointed an interim-manager of its insurance unit, Trent Spurgeon, who previously reported to Mr. Moran as his finance officer. The company is experimenting with a variety of methods of selling term, property, and casualty insurance. It is also looking at selling breakdown insurance, an extension of automobile policies.
Mr. Moran said First Bank System's insurance program generated about 2.5% to the bank's pretax earnings. The usual benchmark for success is about 5% to 10%, consultants say.
Before joining First Bank System, Mr. Moran was a co-manager of the insurance program at BankAmerica Corp.