Fast on the heels of legislation in Pennsylvania that liberalizes the regulation of insurance sales for state banks, First Commonwealth Financial Corp. entered a fee-sharing arrangement with a local agency.
The Indiana, Pa.-based banking company announced the formation last week of First Commonwealth Insurance Agency, which will market insurance and annuities through an alliance with Kuzneski Agency, also in Indiana. Kuzneski will offer a variety of carriers for the bank's customers under a revenue-sharing arrangement.
To prepare to enter the business, $2.8 billion-asset First Commonwealth hired John O. Campbell as a strategic planning executive two years ago.
Mr. Campbell is now president of First Commonwealth Insurance, which geared up shortly after the enactment of the Pennsylvania law that allows banks to sell life as well as property and casualty insurance. Previously, banks in the state could only sell annuities and credit life.
The alliance structure should boost earnings for the banking company almost immediately, according to Mr. Campbell, who worked as a local insurance agent for 17 years before joining the bank. He plans to get 30 to 40 bank employees licensed by the end of next year.
"We don't have any big capital outlay," Mr. Campbell said. "We don't have any brick-and-mortar expenses, and we didn't have to go out and purchase an existing agency's book of business."