https://completemarkets.com/company/novatae/bridge-and-road-construction-workers-compensation/
https://completemarkets.com/Article/article-post/541/Banks-And-Insurance-Bridging-The-Culture-Gap/
Banks And Insurance: Bridging The Culture Gap
If you don’t acclimate yourself to the idiosyncrasies of banking culture, you might find yourself pulling your hair out as you try to work with a bank. This document by Fred Dent provides a comprehensive list of contrasts between banks and insurance agencies.
The cultural differences between banks and insurance agencies are significant. They’re the real issues that you’ll have to manage if you’re considering a relationship with a bank. A frank discussion of these differences will improve your chances of success. It might cost you some time and money, but the pain will be less in the long run.
Banks aren’t sales driven. They engage in a sophisticated form of risk management by making 'small risk' loans.
Most bank boards are very slow to change. You might find their processes difficult to understand, particularly when compared with the workings of an insurance agency.
Bank leadership doesn’t understand how insurance agency owners and operators are compensated. They’re astonished when they find out that many agency principals make more than $100,000 annually — more than many bank presidents.
They also fail to recognize that agency commissions of 10%-15% are for smaller amounts. Bankers often work on a spread of 5%-7%, so they see the higher percentages of agencies as a real opportunity. It takes a while to understand that banking institution loans are usually for much higher amounts than insurance premiums.
Banks undergo significant regulatory overview. Agents don’t fully understand the extent of the regulators’ authority.
It’s very difficult for banks to get their staff to buy in to what they feel are added responsibilities. Most bank employees I know feel overworked and underpaid.
Putting bank employees through a comprehensive licensing program is essential to the success of a joint venture. But it can be difficult to initiate and complete.
Bank employees must complete reports on everything from accounting transactions to deposits and loans. Many banks have sophisticated cost accounting systems that emphasize cutting costs, rather than making sales. Insurance professionals understand that the sales process can be expensive. Your banking counterparts might not.
Bank leadership has probably never experienced an insurance company levying production requirements. Most bankers understand the requirements of risk management underwriting. But they’ll have a hard time dealing with the rejection of a Commercial client — with whom they enjoy a favorable relationship — due to the difficulty of writing their requested class of business.
When bankers hear 'the market' they think of their customers, not whether an insurance company will take a look at their prospect.
Their potential for substantial financial loss leaves banks scared to death of making Errors & Omissions mistakes. They also dread having to tell a bank/insurance customer that their claim might not be paid. Agents must emphasize E&O as a second line of protection. The first line is quality control training in the agency.
Banks typically don’t emphasize continuous training for their employees. You’ll have to explain the various states’ continuing education and the benefits of this training in terms of sales, understanding policies, and preventing E&O claims.
I know of some agents who profited by selling their agencies, but left soon after because bank practices drove them crazy. It’s relatively easy to understand that banks function more like insurance companies than like insurance agencies.
Discuss these issues up front. It’s better to address the differences early in the negotiations than to have the negatives overwhelm you after the relationship is cemented.