Insurance services provider Financial Keyosk is separating from its parent company and expanding its distribution through an alliance with an Internet portal.
At the same time, chief executive officer John Dawson said, the company is looking to increase distribution in the bank channel in 2003 and is in talks with several potential partners.
Financial Keyosk is an agency that sells insurance products through a variety of channels, including through banks. The company said on Dec. 17 that it will formally incorporate on Dec. 31, spinning itself off from its parent company, Zurich North America.
Zurich North America had funded Financial Keyosk since its inception in July 2000.
In addition, the company said, it is forming a joint venture with e-Insure Inc., an Internet portal that sells insurance directly to personal and small-business customers.
Neither deal's financial terms were disclosed.
Mr. Dawson said that his company had always intended to separate from Zurich eventually.
"The timing was such that it was good timing for us and good timing for Zurich to separate out," Mr. Dawson said. Though support from the big insurer has made it possible for Financial Keyosk to grow and develop, the fact remains that "we have 30 carriers on our platform and 29 of them are competitors of Zurich," he said.
The Financial Keyosk model of insurance sales is "a choice model, and it's really important that in a choice model you're not owned by one of the choices," he said.
Mr. Dawson acknowledged that some of Zurich's recent financial troubles had helped speed up the decision to separate.
Zurich North America's parent, Zurich Financial Services Group, recently announced plans to focus on its core business after a spate of financial difficulties this year. The company reported a $2.03 billion loss for the first half, its largest ever.
Zurich also fired its CEO, Rolf Huppi, after pressure from shareholders and is cutting 4,500 jobs.
Mr. Dawson said not all the details of the divestiture had been worked out, and he would not name the new owner or owners.
Financial Keyosk built its business by peddling an "agency in a box" model to banks and small agencies. Using the company's technology, banks and small agencies get access to carriers, a call center for claims and service, and various other back-office functions.
The company's biggest bank relationship is with Union Planters Bank of Memphis. Through this agreement, Financial Keyosk provides agents in the branches and online sales to bank customers.
Mr. Dawson said Financial Keyosk spent most of 2002 perfecting its bank distribution model at Union Planters. This test has proven successful, he said.
"The agents are well on track," Mr. Dawson said, and have shown that when they get up to speed agents in bank branches can each "write somewhere between a million and a million and a half a year" in insurance premium.
The company has also signed contracts with First Commercial Bank of Gideon, Mo., and other community banks that asked not to be named.
"The community banks have a very strong brand with their local customers, and they want to get into the insurance space, but they are really having a difficult time doing that," Mr. Dawson said. These smaller banks cannot afford to buy an insurance agency and do not know how to set one up on their own, he said.
The model works simply, Mr. Dawson said. For $30,000, Financial Keyosk forms an agency, hires the needed agents, and gets all the appropriate licenses. The bank is responsible for paying the agents, and it takes 60% of the commissions, leaving 40% to Financial Keyosk.
In exchange for its share of the revenue, Financial Keyosk handles the back-end relationships with carriers, supplies the agents with quoting technology on their computers, and handles client service through its call center.
Mr. Dawson said Financial Keyosk intends to expand the number of banks it works with next year. The company is negotiating with several banks, he said.
The e-Insure joint venture will give Financial Keyosk access to technology to improve its online offerings through its banks and other partners.
Using what it can learn from e-Insure, Financial Keyosk will be able to create online insurance quote pages for its bank and agent clients that their customers can go to, Mr. Dawson said.
Financial Keyosk sells insurance only through its agent and bank partners, Mr. Dawson said, not directly. E-insure will continue to operate its own site, however.
He said more details on the e-Insure venture would become available after the transaction is completed in January.
