The world’s biggest insurance agency has been quietly adding banks to its distribution force.
Marsh Inc., through its Marsh Bank Assurance unit, now sells property-casualty, group health, and worksite marketing products to the commercial clients of both large and small banks.
“We provide full-service, customized programs for the bank that cover their small, middle, and large bank customers,” said Louis M. Daniels, a senior vice president and the national practice leader of Marsh Bank Assurance group in Hartford, Conn.
Marsh Bank Assurance was formed three years ago as part of an initiative called Marsh Advantage America, Mr. Daniels said. Though Marsh has a strong market share among the largest companies, it was not so strong in the middle and small commercial market. Marsh Advantage America was intended to enlarge market shares by putting small- and middle-market commercial insurance specialists in each of Marsh Inc.’s 65 regional offices.
The bank assurance unit was created at the same time as a way of reaching out to banks to offer these services to their commercial client bases, Mr. Daniels said.
The banks give Marsh entrée to this group of clients, Mr. Daniels said, and in exchange, Marsh offers bank clients customized products, expert advice, and access to insurance companies.
Though Mr. Daniels would not give sales figures for Marsh Bank Assurance, nor the number of banks it works with, he did say that Marsh Advantage America would be the 10th-largest insurance agency if it were broken out on its own. According to the Business Insurance rankings of insurance agents and brokers for 2000, the 10th-largest agency was BB&T Insurance Services, which had $177.9 million of revenues that year.
Forming an alliance with Marsh “requires little investment and little risk by the bank,” Mr. Daniels said, “and for that we deliver a solid revenue stream.”
Under the arrangement, Marsh trains bankers to help them identify prospects, which are funneled through one or two people at the bank who act as liaison with the local Marsh office.
Agents in the office can handle whatever insurance needs the bank clients have, Mr. Daniels said. And though different agents may work on different programs, depending on the account’s size and complexity, the process is seamless to the bankers.
Banks share the partnership revenues.
Mr. Daniels said that working with Marsh is a better choice than buying an agency for many banks because Marsh has offices nationwide that can help bank customers as the bank expands.
He said many banks, once they commit themselves to an agency purchase, must keep buying in order to match up with the bank’s expansion. This means they are continually consolidating systems and people and otherwise digesting acquisitions. He said working with a big agency like Marsh averts these problems.
Competitor Aon Corp.— the second-largest U.S. agency — began a similar initiative in 2000 with its Aon Financial Institution Alliance, which was designed to form referral alliances with banks, coordinate existing bank relationships, and help Aon become more visible.
Last August, Chicago-based Aon formed an alliance with United California Bank of Los Angeles to sell property-casualty insurance for individuals and small businesses.
Carmen Effron, the president of the bank-insurance consulting firm C.F. Effron & Co. in Westport, Conn., called Marsh’s plan to add bank distribution “fascinating.”
However, Ms. Effron said, the top agency will face challenges as it tries to bring its expertise and knowledge to bear for bank customers. Though no one disputes Marsh’s resources, she said, the big question is: “How are they going to integrate them into a bank office? It’s a huge challenge.”
Marsh Bank Assurance needs to supply a streamlined access point for insurance carriers and services that makes working with it easy for banks, she said.
Marsh Inc., which has $10 billion of annual revenues, is a subsidiary of Marsh & McLennan Cos., which also owns Mercer Consulting and Putnam Investments. Both Marsh Inc. and its parent are based in New York.
