Though the Gramm-Leach-Bliley Act of 1999 removed the barrier separating banking from insurance activities, few community banks have ventured into the insurance business since then.

Jon Evans, executive vice president at Atlantic Central Bankers Bank in Camp Hill, Pa., said he understands that community bankers are reluctant to enter an unfamiliar business. Nevertheless, he said he views insurance — particularly commercial insurance — as a significant source of fee income and has devised a way for Atlantic Central’s shareholder banks to get their feet wet in insurance without risking their own capital.

Atlantic Central, with $210 million of assets, has created a subsidiary that plans to offer commercial title insurance to customers of its roughly 250 shareholder banks. Banks that refer business to Atlantic Central Abstract Co. LLC are to split the fees with it.

The bankers bank is learning the title insurance business from one of its shareholder banks, Pennsylvania Business Bank in Philadelphia. Alan S. Fellheimer, president and chief executive officer of the $91 million-asset institution, likened his bank’s role to that of a consultant, for which it will get an undisclosed fee.

In creating a commercial title insurance agency to serve its shareholder banks, Atlantic Central is following the lead of the Virginia Bankers Association, which since 1993 has operated title insurance agencies. It now has seven, each owned by about 15 of its member banks. Fee income from the venture has exceeded $7 million since 1993, in some cases amounting to as much as 5% of the participating banks’ net income, according to Bruce Whitehurst, the trade group’s executive vice president.

Indeed, the Virginia association’s title insurance experiment was so successful that it has decided to deepen its involvement in insurance, creating a subsidiary in 1999 to buy insurance agencies in the state that would be co-owned by a consortium of its members.

Last week this subsidiary, Bankers Insurance LLC, bought its sixth entity, the Gibson Agency in Fairfax, for an undisclosed sum. Mr. Whitehurst said that more than 60 members have joined the Bankers Insurance consortium.

Mr. Evans said Atlantic Central Abstract has insurance licenses from Pennsylvania and New Jersey and is expecting one from Maryland “any day now.” More than two dozen of Atlantic Central’s shareholder banks have expressed interest in using the subsidiary, which is expected to begin operations in the fall, he said.

For now, Atlantic Central Abstract will focus on title insurance, but Mr. Evans said he has the Virginia association’s model in mind for his company’s subsidiary and is wide open to the idea of expanding its involvement in insurance.

If his shareholders favor broadening the insurance offerings, “we would certainly consider it,” he said.

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