Shawmut Selling Life Insurance in Massachusetts

Shawmut National Corp. has entered the life insurance business in Massachusetts through the sale of a low-priced policy that traditionally was off-limits to commercial banks.

The New England banking company has begun marketing so-called savings bank life insurance. Shawmut is the first major commercial bank to take advantage of a 1990 change in Massachusetts law allowing banks to enter this business.

The consumer appeal of savings bank life insurance is its affordability. Savings bank policies, which come in whole-life and term varieties, are among the lowest-priced life insurance offerings in Massachusetts, a bank official said.

"For our first foray into the insurance business, it's important to do something that appeals to the majority of our customers," said Ann Christensen, Shawmut's vice president of direct banking.

Shawmut officials are hoping to broaden their insurance offerings in coming years as commercial banks begin to claim a bigger piece of this turf. Though Shawmut in 1993 bought an insurance agency in an attempt to enter the business in Connecticut, the state never let it sell insurance through its branches. The only other insurance product that Shawmut markets is credit insurance.

Though the Massachusetts legislation allowing commercial banks to market savings bank life insurance was adopted five years ago, the banking company had to wait for a U.S. Supreme Court decision, which came last year, affirming a banks' right to sell insurance.

Federal law allows banks to sell insurance from communities of 5,000 residents or less. Shawmut, which has 170 branches across the state, is selling its insurance products from the Hadley office in western Massachusetts.

Ms. Christensen said that Shawmut, which has dual headquarters, in Hartford, Conn., and Boston, is exploring the possibility of marketing property and casualty insurance as well.

Though thrifts acknowledge that savings bank life insurance hasn't contributed much to their bottom lines, Shawmut has a rare opportunity to profit because of a deal worked out with this insurance's only underwriter in Massachusetts, Savings Bank Life Insurance Co.

Ms. Christensen said the Woburn-based company has agreed not to underwrite the product to commercial banks with more than $2 billion of assets - except for $34 billion-asset Shawmut. The other big banks in the state - Bank of Boston Corp., BayBanks Inc., and Citizens Financial Group, a Rhode Island-based company with a large presence in Boston - would have to find other underwriters.

Shawmut's move into marketing life insurance came as no surprise to Arthur Meehan, president of Medford Savings Bank, a thrift that is a leading marketer of savings bank life insurance in Massachusetts.

Mr. Meehan acknowledged that Shawmut's size makes it a formidable competitor because it has the capital to launch advertising campaigns and has more advanced technology. But he argued that he isn't worried.

"We don't find the large banks particularly effective competition," he said, "with the exception of BayBanks," which has a reputation as a strong retail enterprise.

But Ms. Christensen countered that thrifts like Medford have had trouble selling this type of life insurance because "they don't have the house customer list that a bank our size has and they don't have the capability to do direct marketing."

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