IIAA to Acquire Federal Savings Bank Charter Independent Agents Break New Ground in Financial Services

N/Ard of Directors of the <%=company%> (IIAA) voted unanimously this week to acquire a federal savings bank charter so that its member agents will have access to a full range of financial services products, announced IIAA President Bud Wilson. The bank will provide traditional products for agents to offer their clients-such as loans and mortgages-as well as financing for agencies to use in growing their businesses. PropertyAndCasualty.com reported last week that this move would be considered.

"This is the most exciting initiative IIAA has launched in its 102-year history," says Wilson. "Independent agents will move beyond their role as leaders in insurance to become leaders in the broader financial services marketplace."

The program, scheduled to begin next year, would enable member agents to give their customers toll-free access to the thrift, which would offer quotes, facilitate applications and issue loans. Participating agents would be compensated for those referrals that resulted in a transaction.

"It's not our intention to make bankers per se out of our agents," says Wilson. "But, using 800-number technology, we can empower them to offer a full range of financial services to their clients. We're confident that we'll be highly competitive because we already have a nationwide network of 27,000 agencies. We won't have to invest in bricks and mortar to be in every community in this country."

IIAA chose to enter the banking business as a means of making its members more competitive, says Richard W. Davis, CLU, CPCU, chairman of IIAA's New Products Task Force. "We all talk about having a 'level playing field' with banks, but it's only really level if we are positioned to offer the same products they do.

"If agents are going to be successful in a marketplace where the traditional dividing lines are becoming more blurred every day, they must have access to the same products as their competitors," continues Davis. "That's where owning a bank becomes extremely important." IIAA intends to offer stock ownership in the bank to its member agents and state associations.

The association's leadership has made it clear that this bank ownership does not conflict with its long-standing views on the need for functional regulation of banking and insurance. IIAA has endorsed H.R. 10, financial services modernization legislation that is being debated this week in the House of Representatives.

"The acquisition of a thrift will in no way diminish IIAA's zeal and advocacy for comprehensive financial services reform," says Paul A. Equale, Executive Vice President of Public Affairs. "H.R. 10 is needed to level the playing field between different-size financial providers and to spell out in clear and easily understood language the regulatory framework for the fully integrated financial services marketplace of tomorrow, one that will include independent insurance agents."

The finalization of the IIAA thrift plan is contingent upon regulatory approval by the Office of Thrift Supervision. Approval by regulators should be granted within a year.

IIAA is the nation's largest association of independent insurance agents, representing a network of more than 300,000 agents and agency employees nationally. Its members are small businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents offer all lines of insurance-property, casualty, life and health.