The nation's banks set a number of records related to insurance sales last year, including for the first time, most banks now offer insurance.
According to National Underwriter, of the 8,380 commercial and federally insured savings banks, 4,359, or 52%, earned insurance commissions and fee income during 2002. "These organizations earned a record $3.49 billion in insurance income, up $500 million, or 17.3%, from $2.98 billion in 2001," reported the analysis by "Michael Whites Bank Insurance and Investment Fee Income Report 2002, year-end edition.
The study shows that the largest banks-those over $10 billion in assets-had the highest rate of participation (78.2%) in insurance and produced $2.58 billion or 73.7% of the banking industry's total insurance income.
Collectively, in 2002, these largest banks increased their insurance fee income $803.4 million or 45.3% over their insurance fee income of $1.77 billion in 2001, the study said.
Other findings: Nearly two-thirds (63.9%) of banks with between $1 billion and $10 billion in assets generated insurance income totaling $572.2 million, down 36.7% from $903.2 million in 2001. The amount represented a 16.4% share of total bank insurance fee income in 2002, down from 30.3% in 2001.
* Banks under $1 billion in assets accounted for around $347 million of insurance income, or 9.9% of the industry's total in 2002. This represented an increase of 14.5% over $302.9 million in insurance income in 2001. Of these, banks with less than $300 million in assets generated $193.7 million in insurance income, producing 27% more insurance income than banks between $300 million and $1 billion in assets.
* Insurance income for banks under $1 billion in assets constituted a larger average percentage of noninterest income than for banks over $1 billion. Indeed, this ratio (5.36%) for banks under $1 billion in assets was twice that of banks over $1 billion in assets (2.56%).
* The smallest banks, those with under $100 million in assets, ranked first in mean (8.26%) and median (3.61%) ratios of insurance income to noninterest income. In other words, insurance contributed proportionally more to small banks' nonlending revenue than to banks of any other size.
* In 2002, insurance income for banks under $1 billion constituted a mean 1.09% and median 0.39% of net operating revenue. For banks over $1 billion, the mean and median ratios of insurance income to net operating revenue were 1.07% and 0.36%.