WASHINGTON Robert A. Rusbuldt became chief executive officer of the Independent Insurance Agents of America only last week, but he is already offering an olive branch to his traditional nemeses in the banking industry.
The long Hundred Years War between the banking and insurance industries is pretty much over, he declared in an interview in the groups Alexandria, Va., office three days after his promotion. There are still skirmishes, but the long trench warfare between the two industries is over. We are now looking for opportunities to work together.
Indeed, most of Mr. Rusbuldts lobbying priorities resemble those of many bankers, particularly community bankers: Pushing for repeal of the estate tax, relaxation of S corporation rules and other tax breaks; supporting the Portman-Cardin retirement savings bill; and preventing stricter state or federal privacy laws.
Mr. Rusbuldts nod to bankers is good politics, but it also has a practical motivation: Hes about to become one of them sort of.
The Independent Insurance Agents are part owners of InsurBanc, a Farmington, Conn., thrift that is scheduled to open April 30 in Massachusetts, New Jersey, and Connecticut. It will not offer retail checking, but it will offer many other typical banking products, such as mortgages and commercial loans, certificates of deposits, and trust accounts.
InsurBanc, which has a major investment from W.R. Berkley Corp., a Greenwich, Conn., conglomerate that owns financial and commercial businesses, will offer these services through the groups member agents. Success in its initial three states could lead to a major expansion.
The potential for this bank is enormous when you have 300,000 members and 25,000 actual brick-and-mortar outlets, he said. If this thing goes national over time, it could technically be the largest branch bank in America.
In a move that shows how closely the interests of agents and community bankers are aligned these days, Mr. Rusbuldt said InsurBanc has joined the Independent Community Bankers of America.
He said he recently met with Kenneth A. Guenther, president and CEO of the ICBA, to discuss some services they could offer each others members.
For instance, Mr. Rusbuldt said the Independent Insurance Agents provide so-called errors and omissions policies, in essence malpractice coverage for insurance agents, that bank-owned agencies might want to buy. InsurBanc, in turn, could use some of the back-office credit card transaction services that the ICBA offers to members through a for-profit unit.
Independent insurance agents and community banks share a common struggle to preserve their franchises against financial services conglomerates, he said.
His talk of the natural synergy between Main Street banks and Main Street insurance agents and brokers, and the activities of InsurBanc, may signal a budding alliance.
We have always discussed the synergy there and the affinity our members and the small bankers have had at the local level, he said. I do believe that there is a difference in the agendas between big banks and big insurance companies vs. smaller and medium-size banks and insurance agencies and brokerages.
He implied that community bankers might join his groups fight against proposals favored by big banks and insurance companies to create a national insurance charter, which he said would be more costly and burdensome to agents than a retooling of the existing state-level regulatory system.
Now that the marketplace has been integrated by the Gramm-Leach-Bliley Act of 1999, all financial services companies are interested in each others business lines, and they share mutual policy goals, such as fending off stricter privacy laws, Mr. Rusbuldt added.
There is a strong commonality in the financial services industry on some issues that would transcend big vs. small, he said. It used to be us vs. them on almost everything. Now I think people are much more interested in and focused on the real-world marketplace and not so much on philosophy and ideology.
Though his comments are a jarring break from the rhetoric of the past, Mr. Rusbuldt explained the groups positions have gradually evolved over the years, well before he was promoted on April 10 to CEO. He succeeded longtime colleague Paul A. Equale, who said he left to devote most of his time to his appointment to a key job at the Democratic National Committee.
Mr. Rusbuldt, 44, joined the Independent Insurance Agents, nicknamed the Big I, in 1986 as a senior lobbyist and became executive vice president and chief operating officer in 1998 when Mr. Equale became CEO.
In 1997 the agents decided to support financial reform legislation. The decision was driven by a 1996 Supreme Court decision for Barnett Bank, a key legal victory for banks that protected them from state insurance laws that significantly interfered with their activities.
The groups rank-and-file was not truly swayed, though, until Citicorp and Travelers Group Inc. announced their merger plan, in April 1998. That really woke a lot of people up, because Travelers was one of the countrys three largest insurance companies that relied on independent agents, Mr. Rusbuldt said.
For a lot of reasons, we opposed for a long period of time banks being in the insurance business, he said. Having said that, my membership and I are realists. We werent ostriches with our heads in the sand. We knew the marketplace was shifting rapidly.
Ultimately, he said, banks and insurance agents reached compromises on the issues that divided them, and they were incorporated into Gramm-Leach-Bliley.
Resolution of such stubborn disputes has promoted cooperation on tax, privacy, and other areas of mutual interest that might not have been possible when the relationship between the two sides was so strained.
For instance, Mr. Rusbuldt said, the American Bankers Association backed natural disaster reform legislation favored by his group, which is expected to be revived again. The ABA also signed letters jointly with other banking groups urging lawmakers to repeal estate taxes and enact other tax changes, he said.
Despite the detente, he said the Independent Insurance Agents will still find themselves at odds with the ABA and others on core issues, and legal dustups with the Office of the Comptroller of the Currency could occasionally recur particularly if the agency acts on long-stalled decisions to pre-empt state insurance laws in Rhode Island or West Virginia.
With his relations among bankers on such an upswing, Mr. Rusbuldt who has strong Republican connections joked that he might just be the next comptroller if President Bush seeks a successor to John D. Hawke Jr.
No. That would be too much, too soon.
I dont think anyone is ready for that, he laughed.
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