A year after opening, Assurance Partners Bank, the Carmel, Ind., thrift chartered by the National Association of Mutual Insurance Companies, says it has not been easy to get insurance agents to market its banking products.

The $13 million-asset thrift, which was chartered in February 2000 and opened for business four months later, planned to market loans, credit cards and certificates of deposit - but not traditional deposit accounts - through independent agents representing the 232 NAMIC-member insurers that started the thrift.

But David Fronek, president and chief executive officer of Assurance Partners Bank, said it is taking more time than he expected to enroll agencies to market the products, and that the referral volume has been below projections.

Mr. Fronek, who came to Assurance from First Chicago NBD Corp., said the thrift is growing, but "not as fast as we originally anticipated."

More than 100 agencies have signed up to market the products. "We thought the stream of business from those agencies would be larger," Mr. Fronek said. "A year ago, we thought we'd be 50% larger than we are today."

He said the founders underestimated how long it would take to get the agencies involved - and the work involved in activating them.

The agents do not sell the products directly, but receive fees for making referrals to the thrift. Some agencies are interested in the banking products but are not finding the time to devote to training the agents, Mr. Fronek said. The thrift itself uses regional information sessions, phone support, and manuals to help the agents market its products.

Despite Assurance's slow start, Mr. Fronek said its prospects still seem bright. "We continue to grow every month," he said, and predicted that the tally for June will show 20% to 25% growth in loan volume. "The trends are good."

He also said that about 20% of the agencies now marketing Assurance's products are doing so aggressively, and that as more agencies get up to speed he expects the rate of growth will pick up. And he said the basic model of marketing loans, credit cards, and other banking products through independent insurance agents is still valid. "It's just going to take time for the financial convergence to occur."

The thrift started last June with its first agents in central Indiana. Other Indiana agencies joined three months later, and in early 2001 membership was extended to agents in New York, Massachusetts, Kansas, Illinois, Michigan, Ohio, Pennsylvania and Virginia.

Mr. Fronek said he wants to add agents in more states, especially in areas of the country where insurers have expressed a strong interest in marketing the products.

Today, about 160 agencies, representing 30 of the association's members, are marketing Assurance's full product line. Another 90 agencies are offering one or two products through pilot programs and special promotions.

Aside from signing up agencies, the thrift has to find ways to let customers know they can get loans, certificates of deposit, and other banking products from their insurance agents. But Mr. Fronek said the proliferation of insurer- and agent-owned thrifts - including State Farm Bank and InsurBanc, the thrift formed by the Independent Insurance Agents of America - will help raise awareness for all players in the market.

Cross-selling is tough for all financial institutions, Mr. Fronek said. "It just doesn't happen overnight. It's a major challenge in banking, and a major challenge for us, to show agents that another piece of the customer's wallet is out there."

In light of the disappointing results, Assurance Partners has given its original business plan a few tweaks over the past year. It has added products and services for small and midsize business clients that the agencies and insurance companies can use.

When the thrift's consumer credit card did not do well, it introduced a corporate card merchant card processing services for the agencies, which allowed them to take credit cards as payment for insurance. "We didn't even talk about that product a year ago," Mr. Fronek said, but it turned out to be a popular one.

The thrift is also working with a partner, which Mr. Fronek did not name, to develop an investment management product for the agencies and insurers to help them handle extra cash flow, he said. And it is marketing its consumer products, such as home and auto loans, to the insurers' and agencies' employees. But this is just a way to get them comfortable with the thrift's products, Mr. Fronek said.

"The focus was always on creating a bank for insurance companies and agencies to offer banking services to policyholders," he said, and that has not changed.

Assurance Partners' experience is similar to that of banks which added insurance products and thought customers would automatically come, said Valerie Jordan, the president of Jordan & Jordan Associates in Belchertown, Mass. "I think what all programs are finding is that the individual sells to their comfort level. If they're comfortable selling insurance, they are probably going to keep selling insurance."

Motivating insurance agents to push banking products takes constant training and tying their compensation to successful referrals, she said.

"I think people always underestimate how easy it's going to be to do something like this," said Carmen Effron, president of consulting firm C.F. Effron Co. in Westport, Conn. Agents need not just to be trained about the products, but to incorporate them into their daily discussion with clients - and that takes time, she said.

Ms. Effron stressed that it was too soon to say how Assurance will fare. "This is only one year - which is not a long horizon," she said. An early entrant, she said, will reap the benefits later, when agent marketing of bank products becomes more common.

"When you're the first one, you always have the arrows in your back, but you have the experience," she said. "If you can apply that learning, you'll be that much further ahead."

Mr. Fronek concurred that agents now working to market banking products will be in the best position to compete as banks continue to enter the insurance business. Those agents "see this is our future," he said. "They want to be more than an insurance agency."

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