Banks Enter Insurance Business Via Portals

Computerworld - Banks have begun moving into the insurance field by using Web portals to offer cobranded products from partners in the insurance industry, a new report says.
"They've already built out the infrastructure," said Dave Potterton, an analyst at Newton, Mass.-based Meridien Research Inc. and author of the report. "So as they start to broaden the number of offerings that they provide, insurance is a logical choice."
The target for these insurance services are small-business customers, many of whom have traditionally been underserved by banks and insurers.
The benefits to banks are twofold, Potterton said. "It's an extra revenue stream," he said. "But in a lot of ways, banks look at it as a defensive step so that small businesses don't go to an agent or insurance company directly. It's a way to keep the small business segment focused on that [bank]."
One bank site up and running is Wells Fargo & Co.'s Small Business Insurance product. It lets small businesses buy bank-branded business owners', workers' compensation, commercial auto and umbrella liability coverage provided by InsureZone Inc. in Fort Worth, Texas.
Getting the Web-based insurance product integrated with the bank's Web site didn't pose any difficulties, said David Faranske, senior vice president of Wells Fargo Insurance.
From start to finish it took 90 days," he said. "That was a little shorter than we would recommend, but we got it done."
He said the bank will share revenue with InsureZone, but he wouldn't comment on the financial details or on how much it cost to get the site up.
"But there's always some up-front costs with QA and testing that we incur," he said.
InsureZone is also providing small-business insurance for J.P. Morgan Chase & Co., due to go live later this month, and deals with two more major banks are pending, said company CEO Rusty Reid.
Other insurance companies that are waking up to the possibilities inherent in this new sales channel include direct insurance broker ePolicy.com Inc. in Torrance, Calif. Epolicy.com is already developing a site for Digital Insight Corp. in Calabasas, Calif., which provides Internet banking services to more than 1,100 banks.
EPolicy decided not to market through an insurance aggregator, which would enable customers to compare prices among a dozen or so brokers such as ePolicy.