Bank of Boston Corp. is getting deeper into the life insurance business through a joint venture with an insurance agency.
The $64.8 billion-asset banking company established a joint venture last week with William J. Lynch and Associates, Boston and Clearwater, Fla. The 39-year-old company specializes in executive benefits.
BancBoston Executive Benefits, as the joint venture will be known, will offer life insurance to private clients who are establishing estate plans, as well as benefits plans to corporate clients that want to provide insurance for their employees.
Terms of the deal, which was set up through a limited liability corporation, were not disclosed. It is expected to close this quarter. Carmen F. Effron, president of BancBoston Insurance Agency, is to be chief executive of the joint venture.
In an interview last week, Ms. Effron said the bank wants to work with a seasoned partner for high-end life insurance sales.
"You need people who've had the experience," she said. "Insurance is a complex subject to begin with."
William J. Lynch, founder and owner of WJL Inc., will be president of the joint venture.
"It's simple," Mr. Lynch said. "Banks haven't been doing this, and they have a wonderful client base. Rather than going out and making mistakes, they are working with experienced firms."
Mr. Lynch added that the joint venture brings his "boutique expertise" together with the "institutional structure" of a bank, which he says is much needed in a business with escalating premiums.
At the same time, a spate of traditional life insurance products is being rolled out to retail branch customers through a separate effort handled by the bank's in-house insurance group.
BancBoston Insurance Agency's primary focus will be sales to existing bank customers and employees of corporate clients who are not targeted as prospects by traditional insurance salespeople.
"It's difficult for more and more people to get access to agents because they are aiming themselves at the high end of the market," Ms. Effron said.
Observers said it makes sense for the banking company to use different approaches for distinct market segments.
"Ninety-five percent of the affluent are already adequately covered for all insurance products," said David G. Kaytes, managing vice president, First Manhattan Consulting Group. "That doesn't mean you can't get them to switch, and they pay the highest commission."
By contrast, Mr. Kaytes estimated, the middle market for insurance products-households with net annual income of $40,000 to $75,000-is underinsured.