When it comes to insurance, Barnett Banks Inc. wants to go where few banks have gone before: property and casualty coverage.

The Jacksonville, Fla.-based banking company wants to team up with one or more insurers to offer auto, homeowners, and long-term-care policies - as well as more traditional life insurance, according to Richard Jones, Barnett's chief asset-management executive. Though the insurers would underwrite the policies, Barnett would market them to its customers in return for a slice of the profits.

Barnett has long been at the forefront of banks' struggle to sell insurance. Indeed, it was Barnett's challenge to Florida insurance law that led to the recent U.S. Supreme Court decision allowing banks to sell insurance from towns with populations of up to 5,000 people.

Now the bank is seeking to defy convention again. Property and casualty policies are more labor-intensive than the life insurance policies that most banks hawk. And, they carry significantly more risk.

"How can Barnett jump into this business and compete with a State Farm or an American Family?" asked Joseph A. Alberti, president of Firstar Insurance Services Inc., Milwaukee "They would eat (Barnett) alive."

But Mr. Jones, a former Fidelity Investments executive who arrived at Barnett via Fleet Financial Corp., doesn't see it that way.

Florida's insurance market has been devastated by several severe hurricanes in recent years, Mr. Jones explained. Forced to pay out hefty claims, many insurers have now been looking to limit their exposure in the state. That makes teaming with a well-capitalized institution like Barnett more appealing than it would have been in the past.

"This business will create a unique opportunity for us and help us have a constructive relationship with the insurance community," Mr. Jones said.

The property and casualty effort is part of a larger insurance push at Barnett that Mr. Jones outlined for attendees of a Consumer Banking Association symposium on investments in Washington last week.

Barnett plans to aggressively sell property and casualty, life and disability, long-term care, and workers compensation insurance to the 2.2 million Florida households with which it already does business, Mr. Jones said. It also wants to target another 500,000 households it deals with outside the state.

The bank wants to offer insurance products through several different channels, including, possibly, bank branches. It is considering employing dedicated insurance agents, or having some of its brokers sell simple life policies, Mr. Jones said.

In the past decade, banks have expanded their once-meager insurance programs to include annuities, and, on a more limited basis, life insurance. But they have only recently begun to explore property and casualty, which does not offer the same high margins as life insurance.

Last month, First America Bank Corp. and Comerica Inc., Michigan's two largest banking companies, bought small agencies specializing in property and casualty policies.

Now Barnett is betting that there is real money to be made selling the policies in Florida. In 1994, some $14 billion of direct premiums were written for property and casualty policies in the state, the fourth highest behind California, New York, and Texas, Mr. Jones said.

During the same period, $5.4 billion in premiums came in from auto policies, and life insurance premiums reached $532 million.

But property and casualty can be a tough sell. Firstar's Mr. Alberti pointed out that policies that cover property are a commodity product that "people shop around for quite a bit."

Furthermore, Barnett's insurance strategy could endanger its core banking relationships if customers do not like how a claim is handled, observers said.

For instance, "no one is ever happy with how their claim is handled after a car accident," said Andrew Singer, president of Bank Insurance Market Research Group, Mamaroneck, N.Y.

And he added, "Does Barnett really want to put itself in the position of turning down an otherwise good bank customer for insurance (coverage)?"

On the positive side, Michael White, an insurance consultant based in Radnor, Pa., pointed out that the policies can fit in with Barnett's product line. The banking company is the seventeenth largest mortgage originator in the country, and it could do well offering to sell potential homebuyers insurance when their mortgages are approved, Mr. White said.

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