Healthy Business

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Illinois community bank taps a medical insurance services niche

By Ingrid Case

Plenty of community banks sell particular insurance products, from property and casualty insurance to credit insurance, guaranteed-issue life insurance or mortgage insurance. In December, First Mid-Illinois Bank & Trust in Mattoon, Ill., went one better by acquiring a stand-alone insurance agency that sells group health insurance and long-term care coverage.

First Mid-Illinois, a $1.6 billion-
asset community bank, had purchased another insurance agency about 10 years ago, so it already offered long-term care and health insurance, as well as property and casualty coverage. “But we didn’t have it as a specialty or a depth of expertise,” explains Clay Dean, CEO of the bank’s original insurance agency. 

The Illiana Insurance Agency, the bank’s new specialty health insurance provider, began as a strategic partnership with First Mid-Illinois. The agency brought aboard for the bank a team that specializes in this health-care niche, focusing on educating customers and selling them both long-term care and Medicare Advantage/Medigap coverage from a variety of carriers.

“We’re giving them new leads from our customer base, and we’re also getting customer leads from them.”
—Clay Dean, First Mid-
Illinois Bank & Trust

The purchase was a good value, with affordable multiples, Dean says, and the expanded business line is one that the bank finds particularly advantageous for its future. “Focusing on products for older adults is a smart move in many ways,” he says. “Baby boomers are turning 65 over the next 20 years, starting now, so there are a lot of macroeconomic and demographic tail winds when it comes to health insurance.”

Moreover, Dean adds, the combiation of bank services and an insurance agency is a natural fit. “We have a lot of bank customers who are in need of these products,” he says. “Our bank customers rely on the bank for advice and counsel. We’re in wealth management, we do all sorts of lending, we offer deposit products.”

Dean says it makes sense for the bank’s customers to get insurance advice from First Mid-Illinois as well. In fact, he says, the move into selling medical insurance isn’t so different from what banks have done in the past to provide commercial lending and commercial insurance. “This is a retail play that brings our customer base and reputation to bear,” he says.

So far, the bank’s acquisition of Illiana Insurance Agency is going well, Dean says. “We’re giving them new leads from our customer base, and we’re also getting customer leads from them. We hadn’t done so much in Medicare-eligible products before, and now we’re able to help people in ways that we hadn’t been able to help them before,” he says.

First Mid-Illinois is seeing opportunities to sell insurance clients: wealth management, deposit relationships, and property and casualty insurance coverages. “That’s where the obvious overlap is at the moment. We may have opportunities in commercial lending as well,” Dean says.

The combined bank and insurance group also benefits from new efficiencies, with the bank handling the insurance agency’s back-soffice functions and working on marketing its services to a larger audience, Dean says. “Financially it’s been a success out of the gate,” he says.


Ingrid Case is a writer in Minnesota.

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