As a battle over bank's insurance activities heats up, a little-known trade group is stocking the banking industry's arsenal.

The Association of Banks in Insurance recently issued a study arguing that banks can provide insurance to consumers with less fuss and lower costs than insurance agents can.

The report, which was sent to lawmakers and regulators last month, also maintains that banks that sell insurance have created 44,750 jobs.

The Washington-based associations lobbying push represents an escalation in a long-running war between banks and insurance agents.

The battle has raged since 1982, when Congress ordered banks out of the insurance business, but it has grown more intense in the past year, as federal courts have grappled with an array of cases involving bank insurance powers.

100 Members

The Association, which now counts 100 banks as members, was formed four years ago. Its founders included a group of bank holding companies - the "Sweet 16" - that were exempted from the 1982 law that reined in bank insurance activities. Among them: Signet Banking Corp., Richmond, Va., and Norwest Corp., Minneapolis.

"It was originally an exclusive club," said Andrew Singer, head of Bank Insurance Market Research, Mamaroneck, N.Y.

The Association's mission is to persuade Congress to let banks continue to play a role in insurance sales, and even expand that role.

That's not an easy task when the opponent is the insurance industry. "After the National Rifle Association, the insurance agents are one of the most effective lobbying agencies in Washington," Mr. Singer said.

Lower-Cost Distributors

The trade group's central argument is that banks are "lower cost distributors" of insurance products.

Financial institutions typically levy lower surrender charges and offer more flexible terms on insurance policies, the association said. In addition, banks provide better written disclosures than agents.

In particular, the association maintained, banks do a better job for consumers in annuities, life insurance, and auto and homeowners insurance.

Insurance groups dismiss the findings. Agents, they maintain, are trained to explain their products, while bank-based sales representatives don't always take the time or know how to sell insurance correctly.

"We believe that agents are the best qualified to sell insurance," said Nancy Woodbury, a spokeswoman for the American Council of Life Insurance, a Washington-based trade group. "Some agents feel that they are being squeezed out," she said.

One thing is clear from the report: Banks have benefited handsomely from the ability to generate fee income through insurance sales.

Since entering the business, banks have made "$1.9 billion in risk-free, noninterest fee income in commissions," the association wrote.

The report shows that 2,617 banks - 23% of the nation's 11,462 commercial banks - market consumer insurance. However, this group accounts for about three-quarters of the nation's $2 trillion in bank deposits, says to the association.

Some of the biggest banking companies, such as Citicorp, Chase Manhattan Corp., Bank-America Corp., NationsBank Corp. and BancOne Corp., have started insurance programs in the past few years.

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