insurance: Rethinking Delivery Methods For Greater Penetration

Thanks to a partnership between The Hartford Financial Services Group and 13 American banks, selling insurance is becoming as simple as originating mortgages-and vice versa.

Among the insurance company's bank partners: Mellon Bank, PNC Bank, National City, Fleet Financial Group, Advanta and First Union Corp., which became the first bank to sign on in May 1997, says Charles Carter, senior vice president and director of financial institutions and commercial affinity for The Hartford, which is targeting distribution via the top-50 banks. Six other large banks are in the works. "We've been looking very hard for new channels of distribution. We're in an extremely competitive marketplace," says Carter.

By partnering with banks, which offer huge customer bases and deep customer relationships, The Hartford is able to expand its reach into new markets, such as in the Midwest region where the company wants to build business. "We went to larger banks to generate enough volume," Carter says.

Carter won't reveal what The Hartford has spent on the bank distribution initiative to date, other than to say that it has spent 35- to 70-cents per direct mail solicitation. Results of direct mail are still being analyzed. "We're struggling right now in how to trend them out," he says.

The partnership is equally beneficial to bank participants. "The Hartford was way ahead of the pack in the breadth, depth and availability of it products," says Phil Stevens, senior vice president of insurance and new business development at Advanta Business Services. In February 1998, The Hartford began selling its small-business insurance to nearly 250,000 customers of Advanta Business Services Corp., a subsidiary of Advanta Corp., a business and consumer financial services company with more than 6 million customers.

The Hartford's worker's compensation, general liability and commercial property coverage is available to Advanta customers whose businesses have sales less than $5 million annually. Advanta's customers across the country received a mailing that explained the program, while The Hartford handles all related sales and servicing. "Once the mailing's dropped, (The Hartford) pretty much takes over. I've been very impressed by that," Stevens says.

Advanta's offering has received a two percent response rate-"terrific" in Stevens' judgement. Choosing The Hartford was easy, he adds, as its competitors "were in the infant stages" of selling insurance this way.

Brian Connolly, a senior vice president in Fleet's business and entrepreneurial services group, likes the partnership-"We did shop around"- because The Hartford is "very committed to working with banks in relationships, they offer a very good product with a strong brand name and they're very carefully focused on specific industries," he says, offering insurance targeted to specific small business customer groups, like veterinarians and contractors, for example.

Connolly also praises The Hartford for its "very unusual" phone center. "The Hartford is much more aggressive about seeing the service opportunity and working with banks on what they are looking for: to co-market and to co-influence the customer relationship." The offering to Fleet's business customers is in six states: New York, New Jersey, Connecticut, Rhode Island, Maine and Massachusetts. The offering was made in three direct mailings of 100,000 each over a five-month period. "The focus is on deepening relationships with our customers," says Connolly, "not some random anonymous mailing program." Response has "exceeded our expectations," he says, declining to be more specific. "We've been satisfied." Fleet is also offering The Hartford's auto insurance to its retail customers. "We're very confident our customers will be treated well and with respect," says Peter Sheehan, a senior vice president and director of investment and insurance partnerships for Fleet.

joining strengths

Donald Kerr, senior vice-president of Booz, Allen & Hamilton, says that the trend of such partnerships will increase as insurance companies capitalize on banks' "profound relationships with small business." Banks are very important to small businesses' financial picture, he says, noting that the combination offers the double-leverage of banks' wider distribution and The Hartford's product competence. "The Hartford is a master of using other people's channels."

The emergence of these bank-insurance partnerships reflects a common culture shared by the two financial services sector, says The Hartford's Carter. "We're both dealing with people who deal in utmost good faith."

-C. Kelly

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