Banks are poised to go from zeros to heroes in the property/casualty insurance business by grabbing a chunk of a market they're barely in now, bankers and insurers say.

Policies sold by banks now account for less than 1% of the $300 billion in property/casualty premiums generated each year. But at a recent industry forum, bankers and insurance executives said that share could skyrocket.

"If bank distribution is done right, it could account for 30% of the marketplace" in five years, said Robert Nellson, who set up Barnett Banks' property/casualty direct marketing program before leaving last year to start a consulting business.

Mr. Nellson's projection-which he made in an interview during a conference sponsored by Global Business Research last month in Orlando-is relatively optimistic. Nancy Carini, an assistant vice president at the consulting firm Conning & Co. in Hartford, Conn., said in a telephone interview after the forum that banks' share of the business could hit 10% within five years.

Datamonitor, a research firm in New York, projects that banks will hit the 10% mark within four years, lifting property/casualty revenue to almost $2.3 billion a year from $120 million now.

By 2001, property/casualty sales could account for 20% of bank insurance revenue, compared with 6% now, according to Datamonitor.

Whatever the exact figures, conference attendees agreed that banks will snatch market share from independent agents in the business of selling auto, home, and small-business insurance.

Lee Hays, the manager of Capitol Agency, the insurance affiliate of Capitol Federal Savings in Overland Park, Kan., said property/casualty sales now account for up to 20% of his insurance sales.

At PNC Bank Corp. in Pittsburgh, property/casualty income has increased fivefold in three years, to more than $2.5 million. And it accounts for 10% of the bank's insurance income, said Susan Han Paul, vice president in charge of property/casualty.

There has been an "explosion" of interest on the part of banks and insurers in teaming up to sell property/casualty insurance, said David Steppat, director of marketing for HomePlus Insurance Agency, which markets insurance in conjunction with Minnesota Mutual Life Insurance Co.

But such deals do have their pitfalls, executives say.

For one thing, banks consider insurers "barbarians" who will drive customers away, Mr. Steppat said. And insurers think banks are not aggressive enough in closing sales.

Insurers, meanwhile, face a backlash from their agent sales forces, who fear banks will steal their business, added Ms. Paul.

"You're always going to have agents upset about what you're doing," she said.

And banks have long feared the guilt-by-association syndrome-where customers who feel an insurance claim settlement was unfair might stop doing business with the bank.

Indeed, banks introduced other insurance products like annuities and life insurance before delving into property/casualty simply because they more closely resemble traditional bank products.

But many of the almost 40 conference participants said that since banks sell mortgages, auto loans, and small-business loans, property/casualty products are a natural tie-in. Selling property/casualty insurance is seen as a way for banks to boost noninterest income.

Insurers, meanwhile, see banks as a low-cost distribution channel at a time when competition is squeezing profit margins. Where independent agents charge commissions as high as 15%, bank commissions in direct response programs might be 5% or 6%. Bankers at the conference said they consider that a good return on a minimal investment.

Banks also provide access to a market of customers who know and trust the institution.

"That's the toughest thing to find-someone people trust," said Laverne Crouch, vice president and retail insurance manager for First Tennessee Bank in Memphis.

A recent survey of 70 property/casualty insurers that don't yet sell through banks indicates definite plans to do so. Those selling through independent agents said they expect banks to account for 5.6% of their distribution by 2002, according to the survey, done in September by Conning & Co.

And carriers that distribute through more than one channel expect banks to account for 8.7% of sales by 2002, the survey found.

"I've seen a major acceleration of interest from banks and insurers wanting to make this work," said Ms. Carini, of Conning & Co.

Under law, banks are forbidden to underwrite property/casualty insurance. Most often, they sell it through direct response partnerships with carriers, which involve the bank endorsing the carrier and providing it with customer lists.

Experts say that it will take time for banks to gain market share. They must get used to selling property/casualty insurance, and consumers must get comfortable buying insurance through nontraditional channels.

Mr. Nellson, the consultant who is also a former senior vice president with The New England, a Boston-based insurer, said much depends on how aggressively banks decide to go after the market.

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