Toops Scoops: Dodging the Wave

If you watched President Obama's State of the Union speech last night, you'll know that although priorities may have shifted, he still supports both healthcare and financial services reform — the most recent permutation of which includes the elimination of insurers' antitrust exemption. Unfortunately, to politicians and people in general, ”insurance,” “health insurance” and “financial services” are three dirty words that mean the same thing: bilking the public.

You might say that ever since the 1999 Gramm-Leach-Bliley Act,  banks seem to have gotten the better end of the association with insurance.  And a study released this week suggests that banks are banking on insurance — specifically, agents and brokers — more than ever. A recent report by Michael White Associates LLC shows that insurance brokerage fee income for more than 7,000 savings banks and bank holding companies hit $3.05 billion in third-quarter 2009, a 11.7% increase over last year and the highest level in the last five quarters.  These fees include commissions and other fees earned from selling insurance products, as well as referrals for credit, life, health, property-casualty and title insurance.

The top 3 gainers for brokerage fees in the first three quarters of 2009 were:

1. Wells Fargo & Co., $1.38 billion, up 5.34% from the first nine months of 2008
2. Citigroup Inc., $771 million, down 19.27% from the year-ago period
3. BB&T Corp., $699.9 million, 11.8% gain from the year-ago period.

“Not that there's anything wrong with that,” to paraphrase Seinfeld. We've interviewed many agents whose businesses are affiliated with banks, and most seem very happy with the arrangement. But in the course of the last year or so, as “financial services” has become synonymous with shaft, trickery and deceit, maybe it isn't such a good thing to be lumped into that category.

Just this week, PCI CEO David Sampson warned attendees at the group's annual executive roundtable that property-casualty insurance could very well get caught up in the “wave of political populism” that's crashing down on banks, health insurers and other financial services institutions. So far, agents' enviable position as trusted advisors to their customers has helped them dodge that wave. Let's hope it's a position we can retain through the rough times ahead.