Armed with a regulatory blueprint for selling insurance, banks say they are determined to break ground and build the business in 1997. But what the structure will look like is anybody's guess.

"You look at the strategies (at banks) and they're pretty willy-nilly," said Peggy Altman, assistant vice president overseeing annuity sales at New York Life Insurance Co.

Unlike many of its rivals, New York Life is holding back from pushing life insurance through banks, even though it already sells annuities through them.

"I know the banks really want life insurance," Ms. Altman said. But, she added, it remains to be seen whether banks are "really a viable channel for the product."

That's a sobering assessment for bankers, who have been salivating over the prospects of becoming a force in insurance sales ever since the Supreme Court handed down a landmark ruling last March.

In its decision, the high court affirmed that national banks may operate insurance agencies in small towns, all but ending a long-running legal battle with insurance agents. Since then, some banks have expanded limited insurance operations while others have jumped into the field anew. But so far no one seems to have come up with a sure-fire formula for success.

"Some banks are pretty far down the road in coming to grips with putting together a strategy, and others are still starting," said Jeffrey E. Berta, regional director at Allmerica Financial Corp., a financial services company that markets mutual funds, insurance, and annuities through banks and other channels.

The challenges banks face in competing for insurance business are considerable. Most are just beginning to create the kind of sales culture that is considered essential to success in insurance. There is pressure from top management to show profits quickly, which can detract from efforts to craft a long-term strategy. And getting customers to associate insurance with the bank can be an uphill climb.

"At many institutions insurance is not a part of the mainstream retail business, and that limits the ability of insurance products to become a part of the day-to-day conversation between a bank service rep and the customer," said Les Dinkin, managing principal of NBW Consulting Group Inc., Westport, Conn.

The numbers certainly reflect that. Banks are still only a minor force in sales of life insurance, the most talked-about new offering. In 1996, banks accounted for about 1% of the $9.3 billion in new premiums collected, according to Life Insurance Marketing and Research Association, Windsor, Conn.

Nevertheless, some observers say some banks are committed to cracking into the insurance business, and are likely to make major inroads now that the regulatory path has been cleared.

"Within the next year we're going to see some banks where the insurance business is material, and within two years we'll see many banks succeed at it," said David Kaytes, managing vice president of First Manhattan Consulting Group Inc.

Banks will have arrived when sale of insurance contributes at least 10% of earnings, and is among the top three business lines, Mr. Kaytes said.

Proponents of the push into insurance acknowledge that banks have a distance to go before they reach that level - but they insist the industry is on the right track.

Insurance sales - mostly sales of annuities and credit life policies - account for roughly 2% to 3% of banking's bottom line today, said Moshe Orenbuch, a bank analyst at Sanford C. Bernstein & Co. Some banks - including Norwest Corp. - are getting as much as 7% or 8% of earnings this way, he added.

He said the insurance business is important to banks because "it's a part of their whole capital management. If you're doing estate planning for clients it helps to have insurance products to sell."

Still, getting banks to say spell out exactly what they're aiming for is no easy task. Having fallen short of ambitious sales goals set for their mutual fund divisions in the early 1990s, banks by and large are keeping mum about their prospects in insurance.

Observers cite Norwest Corp. and Chase Manhattan Corp. as having two of the best insurance programs in banks. One reason: both programs have been around for several years, and have built up seasoned staffs of more than 100 agents.

Even banks that have been in the business for several years, courtesy of more liberal regulations in their home states, say they are still experimenting.

"We've been in this for a couple of years now, and we're starting to see what is working," said Andrea Martin, president of Comerica Insurance Services, a unit of $34.3 billion-asset Comerica Inc., Detroit.

Comerica, which started its insurance operation in 1988, is trying a few new things this year, Ms. Martin said.

For example, the insurance division is redeploying its dedicated life insurance agents to target upscale individuals and business owners, instead of the mass market. Ms. Martin also said Comerica will expand the division's sales by phone, an effort started late last year.

In Urbana, Ill., $850 million-asset Busey Bank is fine tuning its product menu. Its brokerage, which has sold variable annuities and long- term care insurance since 1991, will step up its marketing of the products this year, said Curt Anderson, president of First Busey Securities.

But while many banks are talking a big game, a recent stroll through some bank branches offered precious little evidence of a major marketing push - perhaps because insurance programs are vying for display space with an array of other bank products.

American Banker reporters who stopped by branches of such banking behemoths as NationsBank Corp. (in Atlanta), Chicago's LaSalle National Corp., and BankAmerica Corp. were unable to spot any insurance posters or brochures.

A spokeswoman for BankAmerica explained the San Francisco-based bank simply doesn't market insurance that way. Instead, it sends information to selected customers and occasionally displays notices on ATM screens.

At a New York branch of Fleet Financial Group, a manager couldn't provide pamphlets, but did offer a reporter an appointment in a few hours with a sales representative.

At thrifts - which have long had insurance powers - signs of a flourishing insurance business were apparent. At branches of Apple Bank for Savings in New York and Glendale (Calif.) Federal Bank in San Francisco, reporters saw large advertising kiosks with numerous pamphlets touting a variety of insurance products.

Some insurers expressed concern that bank insurance executives are being pulled in too many directions by top managers eager to capitalize on a new business opportunity.

"Some of them are under an inordinate amount of pressure to do something, to just show activity," said Mr. Berta of Allmerica. "They go back to the board of directors and say 'look, we have a strategy' - but they really don't."

For instance, he said, many bank insurance executives are scrambling to reach the underserved middle-market with cheap term insurance products. But that move might prove futile, because the profit margins on term insurance are the lowest of any policies out there.

Others said it's only natural that it should take banks some time to devise their strategies.

"Banks have held a 14%, 15% market share in annuities for several years now, but it took them seven or eight years to get there," said Robert Baranoff, manager of specialty distribution services at the Life Insurance Marketing and Research Association.

Meanwhile, the products keep coming:

*Travelers Group is helping banks develop direct marketing campaigns for term insurance. "We believe there's an untapped middle market, and we've been working with banks to get to that market," said Barry Jacobson, senior vice president, bank sales.

*John Hancock Mutual Life Insurance Co., which sells long-term-care insurance and variable annuities through banks, has created a bank insurance marketing group and plans to boost its sales representatives from two to eight by yearend.

*Jackson National Life Insurance Co. plans to expand its offerings this year. "We're branching out beyond the basic term and universal life policies into estate planning products which draw more premiums," said Bradley J. Powell, president of the financial institutions marketing group.

Though Mr. Powell projects premiums in 1997 of $10 million, up 50% from 1996, he acknowledges his group's contribution barely registers on the radar screen at corporate headquarters.

Juliana Ratner contributed to this report.

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