Last year, Comerica Inc. turned its first profit in life assurance after four years within the business. Going into the black took longer than expected and came after the Detroitbased bank ditched the first decide to sell face-to-face to middle-income customers. With the change of heart, Comerica sliced its branch agent force from 48 to fifteen and redirected the remaining, seasoned agents to the affluent and emerging-affluent market.
"I think that four years ago, those that were involved during this field thought it might be easier," said Andrea Martin, president of Comerica's insurance operation. "We started a little too much trying to be everything to everyone or any people and trying to duplicate the workplace system."
Though many banks once saw life assurance as a perfect initiative into the insurance business, the bloom is off the rose. While the lure of selling life policies to underinsured middle-class Americans remains strong, many banks have stumbled badly during this business.
An example frequently cited is that of Fleet Financial Group. The Boston based bank hired a seasoned insurance executive to create a wide-ranging program, signed on a flotilla of latest workers, then abruptly shuttered the program. the method took about two years.
And over-all bank life assurance sales remain insignificant. within the past five years, banks have did not garner even one decimal point of U.S. life assurance sales, consistent with Lima International, a Windsor, Conn.-based insurance industry trade group. the newest study by the Association of Banks-in-Insurance estimated bank life assurance sales at $600 million in 1998, up from $500 million in 1997.
"The real failure of insurance programs at banks must rest with the bankers themselves," said Michael D. White, a Radnor, Pa.-based bank insurance consultant and director of the Financial Institutions Insurance Association. "They've never really tested life assurance."
Banks got to have more patience than Fleet did in building broad-based insurance programs, Mr. White said. First off, life assurance is legendary for being a troublesome sell. And insurance sales mount slowly as revenues build from renewals, he said.
"You start effectively creating an annuity stream for the banks," Mr. White said.
Mr. White predicts that because life assurance generally has better margins than annuities, if banks were to capture just 7% of the over-all market, revenues would exceed people who come from banks' larger share of the annuity marketplace.
Achieving that 7% will take time. Mr. White confesses that banks haven't budged from where they were in 1995.
Limra's Robert Baranoff expects banks to form inroads into life assurance sales but also believes any such gains aren't near at hand. While many banks haven't succeeded in middle-market sales, he thinks that banks that have the products and make the staff selling those products accountable have an honest opportunity.
He stated, "I believe the bank will assist penetrate the underserved market to some level by merely upping the complexity in non-threatening ways.
"I don't think the banks will be able to overcome these inherent difficulties, but I still think they'll make progress."
Kim Welch, the director of monetary institutions at Hartford life assurance Co
التسميات
Insurance