Insurers should stay out of banking and Bankers should stay out of insuring.
In order to survive in such a competitive business world as we have today, you need to show capabilities and superior service and professionalism. Banks know how to make loans (At least we thought) and Insurers know how to pay claims and the two should stick with what they have built there businesses to do. Just because you have reserves (cash) does not mean you should open a bank and just becuase you have lots of customers does not mean you can provide great insurance advice.
I disagree with your comment wholeheartedly. I believe if a business is able to leverage its resources to expand into other markets, like banking, more power to ’em! Just because one insurer failed at this endeavor does not mean that other insurers trying (or who have been doing) the same thing will follow suit. Plus, if you actually comprehend what you’re reading, you’ll find that Allstate agents will still be offering bank products and contributing banking advice to their policy holders, only through a different bank.
“As part of the distribution and marketing agreement, Allstate affiliates and agents will be able to offer personal savings and money market accounts, CDs and individual retirement account CDs to their customers through Discover.”
Perhaps this was a reaction to the Banking reform of the Obama Administration. In any case, insurance companies do not need to be in the banking business and banks need to stay out of the insurance business. There are more than a few banks out there that have bought insurance agencies that wish they hadn’t at this point.
The only bank successful at this game is BB&T. The revenue from BB&T insurance services is a large part of their profit and kept them in the black when all the other banks needed a bailout. When you know what you’re doing the numbers prove it.
Work for a bank and at some point you will be sold to another bank and be treated like a teller. buy a policy and get a toaster. Bankers are not insurance people and insurance people are not bankers. BB&T, Wachovia, Wells Fargo and the many other banks do not know how to manage the esential relationships with carriers and clients over the long haul to be successful writing mainstreet business. The larger accounts with larger brokers that are owned by banks have the most possibility for success as these entities really do not care about the relationships with their brokers and the carriers all know where they fit in with these brokers, LOL.. They will be bought and sold and neither entity really cares. Its only about coverage and cost with these accounts.
Nationwide Insurance took over the employee’s credit union and turned it into Nationwide Bank. That’s what you get for hiring banking people to run an insurance company.
@ Sarah – Many insurers have to involve themselves in banking because they have such thin margins of profit. Some insurers actually operate at a loss to keep premiums low and depend on banking investments to stay profitable. In my opinion, some insurers are better at banking than the banks themselves. It’s important for all banks (regardless of what other ventures they are involved in) to remember that conservative investing with smaller profit over long periods of time is what this country was built upon; and it is the only way to secure a strong and financially sound future. Speculative and risky investments are a gamble at best and are best left out of the banking world.
Insurers are making a tremendous profit lately, due to premium reductions and the investment income in relation to premiums to surplus. If the exposures go way down (premiums) and your surplus to premium is high, you do not need to make as much of a return on your investment if your underwriting losses are low. You only need to make 4% with a 1 to 1 ratio to be the same as 8% with a 1 to 2 historical industry standard ratio of writtings to policy holder surplus.
Carriers are making a tremendous profit due to reduced exposures and higher than normal investment income.
They should stick with Insurance and bankers should stick to banking. That is just my opinion and historically those that venture into others expertise usually get their head handed to them eventually.
Insurers should stay out of banking and Bankers should stay out of insuring.
In order to survive in such a competitive business world as we have today, you need to show capabilities and superior service and professionalism. Banks know how to make loans (At least we thought) and Insurers know how to pay claims and the two should stick with what they have built there businesses to do. Just because you have reserves (cash) does not mean you should open a bank and just becuase you have lots of customers does not mean you can provide great insurance advice.
Lets all just do what we know!
I disagree with your comment wholeheartedly. I believe if a business is able to leverage its resources to expand into other markets, like banking, more power to ’em! Just because one insurer failed at this endeavor does not mean that other insurers trying (or who have been doing) the same thing will follow suit. Plus, if you actually comprehend what you’re reading, you’ll find that Allstate agents will still be offering bank products and contributing banking advice to their policy holders, only through a different bank.
“As part of the distribution and marketing agreement, Allstate affiliates and agents will be able to offer personal savings and money market accounts, CDs and individual retirement account CDs to their customers through Discover.”
A jack of all trades becomes a master of none.
Perhaps this was a reaction to the Banking reform of the Obama Administration. In any case, insurance companies do not need to be in the banking business and banks need to stay out of the insurance business. There are more than a few banks out there that have bought insurance agencies that wish they hadn’t at this point.
Finally, insurance carriers are wising up. Banks and Insurance are two different worlds and always should be.
I can remember when Farmers tried this and failed.
The only bank successful at this game is BB&T. The revenue from BB&T insurance services is a large part of their profit and kept them in the black when all the other banks needed a bailout. When you know what you’re doing the numbers prove it.
Work for a bank and at some point you will be sold to another bank and be treated like a teller. buy a policy and get a toaster. Bankers are not insurance people and insurance people are not bankers. BB&T, Wachovia, Wells Fargo and the many other banks do not know how to manage the esential relationships with carriers and clients over the long haul to be successful writing mainstreet business. The larger accounts with larger brokers that are owned by banks have the most possibility for success as these entities really do not care about the relationships with their brokers and the carriers all know where they fit in with these brokers, LOL.. They will be bought and sold and neither entity really cares. Its only about coverage and cost with these accounts.
Don’t forget, State Farm Bank is doing fine. Some insurers are able to provide the service they’ve become known for, like State Farm.
Nationwide Insurance took over the employee’s credit union and turned it into Nationwide Bank. That’s what you get for hiring banking people to run an insurance company.
@ Sarah – Many insurers have to involve themselves in banking because they have such thin margins of profit. Some insurers actually operate at a loss to keep premiums low and depend on banking investments to stay profitable. In my opinion, some insurers are better at banking than the banks themselves. It’s important for all banks (regardless of what other ventures they are involved in) to remember that conservative investing with smaller profit over long periods of time is what this country was built upon; and it is the only way to secure a strong and financially sound future. Speculative and risky investments are a gamble at best and are best left out of the banking world.
Insurers are making a tremendous profit lately, due to premium reductions and the investment income in relation to premiums to surplus. If the exposures go way down (premiums) and your surplus to premium is high, you do not need to make as much of a return on your investment if your underwriting losses are low. You only need to make 4% with a 1 to 1 ratio to be the same as 8% with a 1 to 2 historical industry standard ratio of writtings to policy holder surplus.
Carriers are making a tremendous profit due to reduced exposures and higher than normal investment income.
They should stick with Insurance and bankers should stick to banking. That is just my opinion and historically those that venture into others expertise usually get their head handed to them eventually.