Honoring the best bank affiliated insurance agents

Northwestern Financial Review, Sep 4, 1999

A Family Business

Frederick Esgar

Esgar Insurance Agency

Wiley, Colo.

The Esgar family has been in banking and insurance for more than 80 years.

Frederick Esgar is president of the Esgar Insurance Agency, as well as chairman of the board at the State Bank of Wiley in Wiley, Colo. Esgar's grandfather started the agency in 1917. Esgar followed in the family footsteps by starting an insurance agency in another bank before returning to the family business in 1958.

Initially, the Esgar Insurance Agency was founded to fill a void in the community. The agency is still the only locally based agency in the town of 450 people. Although the agency and the bank are housed in the same building, the two operate independently of one another. The bank has $51 million in assets, and the agency does about $1 million in premium underwriting.

Despite The Esgar Insurance Agency's success, Esgar believes that it would be much more difficult to launch a bank insurance business in today's market. He admits the easiest route for a bank these days is to acquire an agency, versus creating a start-up as his family did. "The advantages of buying an agency include getting qualified personnel, and getting a business that is operating profitably right off the bat," Esgar says.

In addition, Esgar sees the increasing competition for insurance companies and customers as a real problem. The insurance companies require banks to generate a certain sales volume, and without that volume they're probably not interested in that bank, he notes. "It's very likely that the competitive companies that you would like to have are already represented by the agency across the street," he says.

Coupled with that is competition the agencies have with direct writers, which continues to grow, he says. "In the long run, what bankers are going to need to do to stay in insurance is form alliances or clusters to work together to have the necessary consortium to attract insurance companies," Esgar says.

Industry Experience

David Duke

Rankin Insurance Agency Inc.

Decatur, Ala.

Rankin Insurance Agency Inc.'s life story spans seven decades, but the company is writing a new chapter with its move into the bank insurance niche.

Rankin Insurance was purchased in June by Alabama National Bank, a 10-bank holding company. The Alabama-- based agency will operate as a wholly-owned subsidiary of First American Bank in Decatur. "There are so many doors that have been opened by this relationship. It is such a great opportunity for us," says Rankin President David Duke. Duke has worked for Rankin for 16 years, and will continue to head up the agency under the new ownership. Rankin Insurance and First American will be on the "cutting edge" of a new industry, Duke says.

Rankin Insurance was founded in 1918 by M.R. Rankin. His son Rex Rankin took over management in the mid1940s. The sale presented an exit strategy that would allow Rankin to retire, and it also allowed Rankin employees to trade private stock for publicly held bank stock.

"We are a separate subsidiary, but the whole idea of this is to be able to offer insurance products to customers of the bank," Duke says. First American already offers services such as securities, mortgages and leasing. "So it was only natural that they would offer insurance products to customers too," he says.

Rankin Insurance already has relationships with insurance companies, and offers a full range of insurance products. The agency also will train representatives that will be placed in bank branches, Duke says. The first step is to concentrate on the "low fruit," those insurance products that go hand-in-hand with the bank's existing products, such as offering homeowners' insurance quotes to mortgage applicants. The "higher fruit" will require more time to cultivate relationships, such as estate planning. "We're going to build around the bank relationship," Duke says.

New Endeavor

David Galvin (top)

Robert Hole (bottom)

FirstFed Insurance Agency LLC

Fall River, Massachusetts

David Galvin and Robert Hole may be insurance industry veterans, but they are breaking new ground in Massachusetts.

Galvin and Hole have stepped to the plate to manage FirstFed Insurance Agency LLC, the first insurance agency in Massachusetts to be licensed by a banking organization. FirstFed America Bancorp. Inc., the Holding Company of First Federal Savings Bank of America, launched the agency in January. "With the advent of legislation allowing banks to now sell insurance products, it's a product line that the bank was interested in getting into," Galvin says.

Both Galvin and Hole had served as vice presidents at Braman & White LLC in Middletown, R.I., before it was acquired by First Federal Bank. The two signed on as vice presidents of FirstFed to help develop and manage the bank's new business. "I see this as a great opportunity to help establish an agency at a bank," Galvin says.

The initial strategy is to set up designated insurance areas in all 14 of First Fed's branches in Rhode Island and Massachusetts. All branches will offer information, and most will also have a designated area with a desk and phone where a customer can call the main office for a quote or additional information.