While several banks have entered health insurance through insurance agency subsidiaries that provide employee benefits, a bank selling individual health policies is a rarity.
Enter National Penn Bank, which is offering two new health-care programs for its customers.
We are certainly trying to position ourselves more as a financial services institution as opposed to just a bank, said Michael Wummer, senior vice president of the $2.5 billion-asset bank in Boyertown, Penn.
The Health Aid Discount Plan offers customers discounts on a range of products including pharmaceuticals, dental care, eyeglasses, contact lenses, chiropractic care, and hearing services that often are not covered by traditional insurance, Mr. Wummer said. The program includes a discount card and costs $119 a year.
The discount products are sold in the banks branches, through direct mail, and through affiliations with local check-cashing businesses.
The bank has sold less than a thousand memberships so far, but the program is in its infancy, Mr. Wummer said.
National Penn is also offering Medicare Supplement Insurance Plans through its insurance subsidiary, Link Financial Services. The plans are underwritten by Monumental Life Insurance Co. of Baltimore. A small version of the program was started in the spring, but the products were formally announced Oct. 10.
Weve been following all the articles in the newspapers and different publications that tell us many Americans feel health-care costs are the major financial challenge at this time, Mr. Wummer said. We decided we would enter that fray and give an alternative to our customer base.
Kenneth Kehrer, president of Kenneth Kehrer Associates, a Princeton, N.J., consulting firm, said the plans are a departure from what banks have tended to attempt in insurance.
A few banks have dabbled in things like prescription discount plans or eyeglass discount plans, but this has not been very big on the part of banks, he said. While he has not done specific research on health products sold through banks, my guess would be that its not a big revenue item.
Mr. Kehrer said he doubts that selling such products would produce the kind of penetration you would have to get to see meaningful returns. Banks have to be careful not to do everything, but to do the things that their customers want to buy and that they can deliver profitably.
Terry Freeman, a managing consultant with Tillinghast-Towers Perrin in Atlanta, said, The jurys still out in terms of successful and profitable participation in bancassurance.
While he knows of some banks experimenting with health products sales, it is the minority at this point, as most banks are focused on carving out a bigger market share of life and property-casualty insurance, he said.
However, there is no real reason why a bank cannot successfully sell health products, Mr. Freeman said. It would need to overcome the product-silo orientation that plagues banks selling any type of insurance. Getting into insurance is not simply a matter of buying an agency or offering a product, he said. Banks need to cut across those silos and improve the distribution economics."
