On Nov. 17, the U.S. Office of Thrift Supervision (OTS) cleared an application by the Independent Insurance Agents of America (IIAA) and W.R. Berkley Corp. to establish a new federal thrift by the name of InsurBanc.
The regulatory action comes after a thorough review of the application by the OTS. “It’s been a long time coming and we’re very happy,” said Bob Rusbuldt, IIAA executive vice president.
The entire process took a little more than two years-which is not out of the ordinary, according to InsurBanc’s CEO Mike Herlihy. “There’s some benefit to a process that took as long as it did and was as in-depth as it was,” he said. “The dialogue between the OTS and us as organizers and management…has been thought-provoking, [and] I think we’ve ended up with a model that is better than it was in the beginning.”
The new full-service federal savings bank will enable customers to access financial products through their local independent insurance agent. In turn, independent agencies will become independent financial services agencies.
“Diversification is the name of the game,” Rusbuldt said, explaining how they are looking at the bank from both the independent agents’ perspective and their customers’ perspective. “Offering convenience, service and competitive prices to your customers is something that consumers are looking for, and it’s an additional revenue stream for independent insurance agents.”
InsurBanc will be located in Farmington, Conn., and will initially operate in three states: Connecticut, Massachusetts and New Jersey. “We’ve got a good concentration of agencies in those three states…so there will be plenty to do,” Herlihy said. “This will be the place where we really perfect everything we need to…and when it’s time to modify our business plan [and expand into other states], we’ll obviously have the dialogue with the regulators that is needed.”
For now, the goal is to get the bank up and running by the end of the first quarter of 2001. With four people already committed to filling senior management positions, Herlihy anticipates a staff of roughly 20 employees by the end of the first year.
Before its launch, InsurBanc must submit to the OTS an updated business plan reflecting all material changes from the last version submitted. “I don’t anticipate that there’s a whole lot of changes,” Herlihy said. “All of our responses were really further clarification of what we had stated in the plan.”
Looking ahead, Herlihy may have a long road to travel, but he’s ready for the journey. “As we get the various requirements and conditions satisfied for the OTS in the next couple of months, my role is then going to change to salesman,” he said. “I’m going to be spending a lot of time on the road, meeting with agents and the state associations…being the face associated with the bank early on, generating enthusiasm and beginning the delivery of all of the products and services.”
The bank’s approval is seen as a “huge step” in terms of what independent agents can do with their business and in terms of how the public will view them. “What this does is it gives them the opportunity to get involved in a different end of the financial lives of their customers,” Herlihy said.
In this new world of financial services, InsurBanc will give independent agents a way to compete with some of the large insurers and big financial conglomerates that have already set up their own thrifts.