A merger-era decline in personalized service has left an opening for insurance agents to sell banking products to individuals and small businesses.

So say Robert A. Rusbuldt, executive vice president of the Independent Insurance Agents of America, and Michael W. Herlihy, chief executive officer of a thrift it is forming with an insurance-company partner.

InsurBanc, to be based in Farmington, Conn., received a conditional charter last week to sell deposit and loan products through 3,000 independent insurance agents in New Jersey, Massachusetts, and Connecticut.

Community banks are losing the personal touch that independent agents can provide, Mr. Herlihy said. Consumers and small business owners are concerned about “the consistency of personnel, the consistency of management at local branches,” he said.

But, insurance agencies “tend to be small businesses themselves, they tend to have a very stable staff of people, and very many of them are family owned,” Mr. Herlihy said.

In addition, insurance agents tend to have very strong relationships with their small business customers, said James H. Overholt, a senior consultant for the Milliman & Robertson Inc. consulting firm in Chicago.

Those relationships will help agents cross-sell bank products, he said.

“The commercial insurance world is strongly relationship-focused,” Mr. Overholt said. “Many have observed that the commercial agent may well have a better relationship in the small commercial market than the bank does.”

Mr. Rusbuldt said his trade group “recognized a number of years ago that the financial services world was changing rapidly, and that diversification was becoming the name of the game.

“Since so many of our members were forming relationships with banks to have banks sell insurance products, [we asked,] ‘Why not have insurance agents sell banking products?’ ”

David S. Outhouse, treasurer of the Massachusetts Independent Bankers Association, said community banks do not view agents as a big threat.

“I welcome the independent agents on board” as competitors, said Mr. Outhouse, who is also president and chief executive officer of First and Ocean National Bank in Newburyport, Mass.

“A lot of people have tried to take our customers, and they haven’t done so yet,” he added. Agents are “just one more entity trying to go after a piece of a pie that’s isn’t exactly growing in the first place.”

But community banks are not ignoring the new competitors, Mr. Outhouse said. “This industry is evolving, and if you do not change and grow with it, you are not going to survive.”

InsurBanc plans to start selling bank products through the independent agents sometime in the spring. Meanwhile it must meet criteria laid out by the OTS, including updating its business plan and submitting an agent education program. It must also obtain approval from the Federal Deposit Insurance Corp.

From the start the thrift will offer “a full range of deposit products and loans, both consumer and commercial” through online and face-to-face banking, Mr. Herlihy said. Agents will refer customers to the thrift, but “the independent agent will remain the relationship manager,” he said.

Actual bank transactions will take place over the Internet or by phone of fax, he said. InsurBanc is also working on a plan to defray the fees its customers will pay by using other banks’ ATMs

At first the thrift will offer its products only through the trade group’s 3,000 member agents in Connecticut, Massachusetts and New Jersey. “Our goal is to show that we can run a bank in those three states, and be profitable in those states, and provide good products to our consumers,” Mr. Rusbuldt said.

Eventually — there is no specific timetable, he and Mr. Herlihy said — the plan is to market through the group’s 300,000 members across the country.

Other insurance entities, among them the National Association of Mutual Insurance Companies in Indianapolis, are setting up thrifts to sell products through independent agents. But Mr. Herlihy said his trade group’s role means InsurBanc “is truly out to serve agents and their clients exclusively.”

The IIAA’s co-owners are W.R. Berkley Corp., an insurance holding company based in Greenwich, Conn.; and two Berkley subsidiaries, Signet Star Holdings Inc. and Signet Star Reinsurance Co., both of Florham Park, N.J.

Mr. Herlihy said the thrift’s overarching goal is to help agents build their business. “This was developed to be an arrow in the quiver of an independent agent,” he said. “This bank is not looking to take the world by storm on its own.”

But Mr. Outhouse said that to succeed in this market takes more than just a good relationship with customers. “People stay with any business because they receive superior service and quality products,” he said.

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