First of America Bank Corp., in the midst of an aggressive expansion of its insurance sales program, is shopping for an agency in Indiana, Michigan, or Illinois.

The Kalamazoo, Mich., banking company plans to complete an acquisition by yearend and may buy more agencies as opportunities crop up, said R. William Shauman, an executive vice president.

"We haven't been at this business all that long, so we need to buy both the book of business and the management talent," Mr. Shauman said.

First of America has been a leader among banks in the investment product and insurance businesses. Mr. Shauman helped launch the company's $5.8 billion-asset Parkstone Funds group and oversaw investment sales before taking over the insurance effort this year.

The $23.6 billion-asset company already owns three agencies in Michigan and Illinois. It has 16 full-time agents plus 100 representatives who sell basic life insurance and annuities in 611 First of America bank branches.

Mr. Shauman said the company would acquire insurance agencies based in towns with populations of up to 5,000, taking advantage of the recent Supreme Court decision that allows banks to sell insurance from such towns.

Right now, the company is focused on selling property and casualty coverage to its commercial customer base.

Louis M. Daniels, an insurance consultant in Farmington, Conn., said selling property and casualty is a smart first step for a bank.

"On the P&C side, there is so much that goes into the servicing of those policies that acquisition is the right way to go," Mr. Daniels said. "It's easy enough to build the life side from the ground up."

To gain an edge over competitors such as direct-marketing giants Geico Corp. and USAA, First of America gives its commercial customers the option of paying employee insurance premiums through payroll deductions, instead of drawing the payments from checking accounts.

"It's more convenient for customers, because you can't overdraw someone's payroll check," Mr. Shauman said. "This is a technology advantage that banks have."

He added that there are plans for a direct marketing campaign in the next two to three months to boost sales of umbrella policies and individual home and auto coverage.

The company is also interested in life insurance, but it is waiting to see if state insurance regulators loosen restrictions on life insurance sales by banks.

Michigan and Illinois allow banks to sell any kind of insurance. Banks in Indiana can sell all lines except life insurance. Mr. Shauman said First of America was waiting for state regulators in Florida come out with specific guidelines for banks before expanding there.

Life insurance is profitable "and people are underserved in that area," Mr. Shauman said. "But it's a discretionary purchase - people don't have to buy it. If you want to own a home or drive a car, then you have to have a policy."

Michael White, an insurance consultant based in Radnor, Pa., agreed. "Generally, there is more money to be made in the life area," he said. "But over time, if you build that P&C business, you really build a stream of renewal income that can become significant."

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