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What's New in Cybertalk?
By Jean Gora
May 2001
Note: CyberTalk is a column
that appears monthly in LOMA's Resource, the magazine for insurance and
financial services management. To see more contents of the magazine and to see
how to subscribe, click on RESOURCE MAGAZINE.
Integrating Insurance into
Online Banking
Seventeen of the 20 largest U.S. banks and
thrifts offer home banking on the Internet, and the same banks also offer
insurance on the Internet. (One bank that does not offer Internet home banking
does offer annuities.) However, a review of the demos of their Internet home
banking services (see Table)
suggests that these services rarely incorporate insurance. Internet home banking
services typically include the following features:
- Balance information for their major deposit
and credit accounts at that bank.
- Funds transfer among these accounts.
- Online bill payment.
In some cases, these home banking services also
allow access to balance information for securities accounts. In no case,
however, do these services appear to allow access to information regarding
insurance policy values. If the bank offers insurance, it typically provides an
insurance link on the main page of the Web site or within a section on personal
finance—not within the home banking service.
This review covered the sites of the 20 largest
publicly traded U.S. banks and thrift holding companies ranked on the basis of
total assets in September of 2000. This discussion uses the term
"bank" to refer to both banks and thrifts. Two pairs of banks within
this group of have since merged: Chase and JP Morgan, and US Bancorp and
Firstar. For purposes of this discussion, a bank is deemed to offer insurance on
the Internet if its Web site promotes any insurance product for sale to the
public. The two banks that offer neither Internet home banking nor Internet
insurance—JP Morgan and State Street—focus on the institutional market.
Of the banks that offer insurance on the Internet
some do little more than mention that fact and encourage prospective buyers to
phone the bank or visit a branch. If neither of those alternatives suits, one
bank—in the spirit of generosity—advises the prospect to consult his local
insurance agent, apparently not one of the bank’s own agents.
The banks that offer some kind of online price
quotation for insurance are the most aggressive of the banks providing Internet
insurance. They are Citigroup, Bank of America, Chase, Bank One, First Union,
Wells Fargo, Washington Mutual, US Bancorp, KeyCorp, National City Bank,
Firstar, and Wachovia. All of these banks offer online forms that accept
prospect information and use it to generate quotes.
First Union offers online quotations for more
insurance products than any other bank—a full range of life insurance,
annuities, and personal lines property & casualty products. Washington
Mutual comes next. Most banks that offer quotation capability do so on only
several products, usually term life, auto, and homeowners insurance. US Bancorp
offers immediate binding coverage for term and whole life insurance, the only
bank in the group that claims to do so. (If others do it, they do not publicize
it; the author did not want to fill out fictitious online applications in order
to find out.) Despite the fact that U.S. banks and insurance companies can now
affiliate with one another, most of the banks that distribute insurance do so as
agents of established independent insurance companies such as AIG and Great West
Life.
Thus, the move by banks into insurance
distribution on the Internet continues but at a moderate pace. Home banking
services offer banks an important advantage in Internet insurance distribution—the
fact that people who use them to pay bills need to access them on a monthly
basis. They will not be able to capitalize on this advantage until they
integrate insurance more fully into these services.
See previous issues of CyberTalk in the CyberTalk
Archives.
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