Insurance Blends Naturally Into Bank Business
GRAND RAPIDS — When, amid the storm of mergers, the banking industry has had the chance, it has begun taking advantage of certain changes in the law by dipping its toes into the insurance business.
It was a process viewed with grave misgivings and even fear by many insurance agencies. But now some agencies are becoming part of the mix.
In fact, according to its chairman and CEO, Art Johnson, United Bank of Michigan has had its feet in the insurance pond for years, and now has taken the plunge to make insurance a regular part of its operations.
Johnson explained that the bank's holding company has owned its own insurance agency since 1970. The firm acquired the agency under an old Michigan Bank Holding Company Act, which permitted bank ownership of such an entity in communities having populations of 5,000 or fewer.
"It's a fairly natural fit," Johnson said.
"The kinds of transactions we get involved with our customers are financial in nature; they're buying a home, they're buying a car, they're acquiring assets in one form or another and those assets need to be insured. And so while it's a completely different kind of product, the need for it comes about where banking transactions are involved."
The need, he said, obviously arises in cases where the manufacturing machinery — or house or car — for which one seeks a loan is the collateral; it must have complete insurance coverage.
But most people's need for insurance goes beyond that, Johnson said.
"What we're interested in doing, rather than selling you an insurance product, is talking to you about what your insurance needs are. And our philosophy in that regard is not terribly different from what our bank philosophy is: We don't want to sell you a product, we want to understand what your needs are and be your source to fulfill those needs.
"We don't view ourselves as a sales organization," he grinned, "as much as an inquisitive service organization.
"We think we are doing a less-than-adequate service if the clients have needs that they may not ever be aware of that go unfulfilled."
He explained that though the agency — now a subsidiary of the bank and known as the United Insurance Center — still is located in a United Bank office building in Wayland, its staff serves all of United's other nine offices.
Johnson said the agency led a fairly sleepy, small-town existence until the mid-1990s when changes in state law permitted banks to become directly involved in insurance no matter what their communities' size.
When the state banking law was liberalized in the mid-90s, he said, "We changed our operation internally. The agency became a subsidiary of the bank. At that point we could not avail ourselves of what were broader powers under the state act, so we didn't really immediately go gangbusters with that operation.
"Up until the last couple of years we didn't try to increase our insurance profile."
Now though, he said, the firm wants to use insurance in tandem with the rest of its products either as an opportunity for one-stop shopping for people who come in to obtain loans, or in terms of counselor selling for personal or family financial planning.
The center's manager is Ron Wannamaker, a United vice president, who indicated the firm handles both investment side and property and casualty insurance. The center also offers individual health though it does not market group insurance to businesses.
"All of our personnel continue to be based at our Wayland office," Johnson said, "but they travel to all the offices, so if a loan closing is scheduled for one of our offices, they can be there or have whatever papers are necessary delivered there or do whatever is necessary to get the job done."
He said they just as happily work at the family kitchen table, as well.
Johnson said he regards "what appears to be a sales activity to be an extended service activity. And that permeates the entire organization and the insurance center and investment center as well."
He said ideally the bank's dealings with its clients attempts to be a team kind of approach.The insurance center currently has four licensed agents and may come to need more.