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.

The Coalition Against Insurance Fraud’s recently released interim survey of state insurance fraud bureaus includes some predictable stuff, and a couple of surprises. For instance, it’s no surprise that the bureaus reported that all types of insurance fraud were up, and that their operating budgets were down.

What did surprise me, though, was that agent fraud is the third most prevalent form of fraud being reported by the bureaus, right behind bogus health insurance and drug diversion:

Suspect cases involving insurance agents increased substantially year-to-date in 2009. A total of 69% of respondents said agent cases were up slightly higher or much higher so far in 2009, while a quarter reported no change. Only one bureau said the number of cases involving agents had fallen in 2009.

We contacted CAIF’s Dennis Jay, who minced no words:

Let me be clear upfront: The vast majority of agents are honest and committed to their clients’ best interests. But a small and disturbingly growing minority are painting the entire profession as a bunch of crooks. .

Survey results and CAIF’s own database of agent fraud cases culled from news stories and other sources shows a steady increase in agent cases since 2007 through 2009. “This suggests agent fraud cases may be rising, but also may reflect increased crackdowns by insurers, fraud bureaus, state AGs and other fraud fighters to better detect agent scams,” Jay said. “Or it may reflect both trends. At bottom, agent scams are a significant consumer problem, and constant headache for insurers and state regulators alike.”

Stealing premiums without buying the promised coverage is one of the most common forms of agent fraud. “It’s easy to commit, and can leave clients dangerously uncovered when they have a claim,” Jay said. “Some agents are selling bogus health coverage, which is spreading rapidly around the U.S. We’re also seeing producers selling overpriced life products clients may not need, want or understand. Seniors especially are frequent victims of annuities scams. ”

Crooked agents also are selling “shady investments in non-insurance areas far out of their insurance expertise, and often without a license,” Jay said. “Smaller businesses in high-risk operations also have been sold fake liability coverage or had premiums stolen. They’re vulnerable because liability premiums tend to be high and coverage isn’t always easy to find.”

Agent fraud is the Mr. Hyde opposite of the Dr. Jekyll of agent-as-expert-consultant, with wise guys using their industry knowledge to exploit the average Joe, Jay said. “Dishonest producers coldly exploit their position of trust. They’re authorities in a highly complex, technical arena that most people don’t easily understand. So average, trusting consumers tend to believe whatever agents tell them. This is especially true of seniors, who’ve built up larger portfolios that crooked agents try to drain. The profession’s leadership and carriers also keep urging the public that agents are professionals that people can trust. So when people believe the marketing messages, trust their agent and then get swindled, that leaves a bad taste in the public’s mouth.”

To avoid public backlash, Jay recommended that the industry get behind some serious housecleaning.

The agency community’s associations across all lines should be challenged to aggressively help weed out the bad actors before state legislators take punitive actions and the agency profession’s public image among customers plummets lower. If people think they can’t trust producers, their first temptation might be to try direct writers. There’s so much at stake competitively that the entire agency community, especially the leadership, should aggressively clean out its closet.

In our December look at agency Internet marketing, the first question in our reader survey was, “Does your agency/brokerage have a Web site?” The response was 81%. Why not 100%, you might ask.

Another person asking was Duke Williams, a blogger and consultant on agency Internet use. Last month, Duke decided to conduct an informal survey of “feet on the street results for actual agency Web presence.” His methodology was simple: he used the “find an agent” feature on many insurance carrier Web sites, and Googled the term “car insurance city name state name.” He used the SuperPages, YellowPages and about a half dozen other lists online.

In individually searching several locations in South Carolina, North Carolina, Georgia, Alabama and Florida, he found:

• 248 independent agencies
• 49 Nationwide agencies
• 19 online-only agencies
• 51 State Farm agencies
• 26 Allstate agencies
• 7 Farmers agencies
• 7 Alpha agencies
• 2 Farm Bureau agencies
• 1 GEICO local agency
• 1 Direct General agency (rregional non-standard auto insurance carrier with owned agency locations)

While these results seem to indicate a strong presence for independent agencies, a closer look tells another story. Of the 248 independent agencies that came up in the search, only 64 — a paltry 25.8% — had a Web site, and only a fraction turned up in the Google “local results” search.

Delving deeper, Duke discovered that the agencies with Web sites weren’t consistent in functionality, even in non-real-time. For instance, 51.6% had quote request forms, but only 12.5% had “request a policy change” forms, and only 20.3% had “report a claim” forms. Not surprisingly, Duke reported that all the national direct writers had very high functionality.

While you could argue that Duke’s results are atypical — focused on a limited geographic area and a single line of business — you’d be missing the point. In every way, direct writers are making it easy for consumers to find and use their products and services — and it isn’t all about price.

Woody Allen once said that “80% of success is showing up.” When it comes to Web pages, the odds are even better if you show up with a functional product that makes it as easy as possible for people to use what you have to offer.