KeyCorp plans to offer health insurance and commercial property and casualty insurance to its small-business customers by the end of 1998.
The bank introduced its managed care health insurance program Monday to small-business owners in Cleveland, Akron, and Canton, Ohio. It plans to expand the program to other markets.
While the move expands KeyCorp's insurance offerings, it also rounds out a slate of small-business products that includes sweep accounts, equipment leasing, and payroll processing.
"It's a great revenue source for us and a great service we can provide for our customers," said Roger Dunker, president and chief executive officer of KeyCorp's insurance management group.
Within three years, KeyCorp plans to have a 6% market penetration for its small-business insurance products in the 14 northern states with KeyCorp branches, said Mr. Dunker.
KeyCorp was attracted to this market because of a falloff in independent insurance agents, which have traditionally served small businesses, over the last 10 years, said Mr. Dunker. The number of small businesses, meanwhile, has grown during that period, he noted.
KeyCorp is offering the health insurance, which it calls Select Partners, through an alliance with the Ohio subsidiaries of two national insurance companies, Kaiser Permanente and United Health Care. It will also offer a health care program affiliated with University Hospitals of Cleveland to business owners in Ohio.
Mr. Dunker said 28% of businesses with less than 25 employees have health insurance.
KeyCorp will offer property and casualty insurance to small-business owners in all of its markets by the end of next year through an alliance with Baltimore-based USF&G Corp.
According to an American Banker survey of more than 400 business owners, 16% use insurance companies for their business needs and many of that percentage group said banks don't offer the products they need.
KeyCorp plans to sell the property and casualty insurance by telephone and could give entrepreneurs a price quote in 15 minutes, Mr. Dunker said.
But KeyCorp isn't the first bank to offer such programs. First Union Corp. began mailing offers for the Hartford's property and casualty insurance to small-business owners in May and also sells the insurance by telephone.
