First Union Insurance Group in Charlotte, N.C., believes the success of the insurance business hinges on distribution and with two recent acquisitions it is working to increase its own in as many ways as possible.
The company is exploring a new distribution avenue a Columbus, Ohio, online agency called Pivot, which it bought in July and a more established one a commercial insurance broker that it bought in September. It hopes to find a broad range of cross-selling opportunities.
Pivot offers life, annuity, auto, and homeowners products online, as the insurance provider to First Unions Web banking service, and through First Unions call center.
It also customizes its insurance Web sites for other banks, such as Crown Bank and UNB Bank, said David C. Florian, a co-president of Pivot. Mr. Florian added that Pivot is targeting the top 50 banks to offer them private-label versions of its site.
Though some banks may be apprehensive about working with the subsidiary of a competitor, Mr. Florian said, most tend to like to choose vendors and third parties who have experience in the banking industry.
First Union Insurance Group president David de Gorter said this experience, combined with a greater understanding of the banking-insurance relationship, is one reason Pivot has a chance to dominate the market even in the face of competition.
Though many online companies are trying to deliver insurance sales services through Web sites of banks and other financial services providers, Mr. de Gorter said, no one company has captured the marketplace. We have as good an opportunity as anybody, he said.
What Mr. de Gorter believes boosts Pivots chances for success in the online world is that it is backed by First Unions deep pockets, whereas many online insurance agencies are on tenuous financial footing. In addition, he said, the two million online banking customers of Firstunion.com are a good starting point for Pivot.
For its larger corporate clients, First Unions new commercial insurance brokerage agency enables it to offer face-to-face interactions with First Union insurance brokers.
Products such as commercial property and casualty insurance, employee benefits, and workers compensation are now available to corporations through Tribus First Union Insurance Services in Wayne, N.J., which was formed in September when the bank bought Tribus Cos.
If were able to leverage the relationship across more services, the relationship becomes more complex, Mr. de Gorter said, so the client is less likely to go elsewhere.
The acquisitions of Pivot and Tribus are helping provide greater cross-selling opportunities for the banking company. Mr. de Gorter said First Union is now integrating its insurance operations with its banking operations to ease cross-selling. The phone-service operation of Firstunion.com has been integrated with Pivot so that customers can move seamlessly from banking customer service to insurance customer service.
Mr. de Gorter also said that First Union intends more insurance acquisitions but that it has no plan to buy an underwriter. We have to be really good at distributing products before we worry about underwriting, he said, adding that most underwriters do not have the financial performance First Union expects from its subsidiaries.
John Balkind, an analyst at Fox-Pitt, Kelton, said First Union is positioned for success in its insurance operations, because of its dedication to the channel.
Mr. Balkind expects First Union to buy another regional commercial lines broker to fill out its footprint but that challenges to cross-selling remain. You need to put the right packages and products together, he said.
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