First Niagara Financial Group Inc., a community bank holding company in upstate Lockport, N.Y., has added a risk-management consulting department in its insurance subsidiary.
The target is large and midsize commercial banking customers of its three banks: First Niagara Bank, Cortland Savings Bank, and Cayuga Bank. The department will offer to analyze customers past property/casualty losses and forecast future losses and help prevent them.
First Niagara Risk Management has one employee now its director, Wayne Salen, a 25-year risk-management veteran was most recently the director of risk management for Park Associates Inc. of East Aurora, N.Y., which runs nursing homes.
But Mr. Salen said he expects the department, which opened July 30, to expand. Risk-management consulting is crucial to the $2.7 billion-asset companys becoming a one-stop financial services company, he said.
As its banking customers get bigger, First Niagara wants to be able to provide the high-level insurance services they will need, Mr. Salen said.
The department is part of Warren-Hoffman & Associates Inc., which First Niagara Bank bought in 1999. Warren-Hoffman is a full-service agency that provides property/casualty insurance, financial planning services, and employee benefits to individuals and companies. It had revenues of $16.7 million last year and receives referrals from of all three of the holding companys banks.
For now the risk consulting services are free to customers of Warren-Hoffman and First Niagara. But Mr. Salen said fees may eventually be charged.
He also said he is looking into developing more complex offerings. One might be help with establishing and running customer-owned captive insurance companies, which can be used for such purposes as covering workers compensation or medical malpractice claims. Another might be help with securitizing hard-to-cover or unconventional risk.
As the prices for commercial property/casualty insurance continue to increase, Mr. Salen said, more customers will want access to such alternative risk products.
Also, he said, an unusually large volume of payouts has started to reduce the industrys ability to fund new policies, so some customers with complex risk profiles are having trouble getting coverage. A risk-management practice can help cut insurance costs by identifying ways to improve employee safety and reduce the likelihood of damage to property, Mr. Salen said.
A spokeswoman for First Niagara Financial said Warren-Hoffman has always provided some basic risk-management advice, but nothing like what the new department will offer.
Bank-insurance consultant Kenneth Kehrer of Kenneth Kehrer Associates in Princeton, N.J., said banking companies trying to expand their commercial business must offer extra services like risk management to keep growing customers from defecting to larger banks and agencies.