business in Michigan. Unfortunately, the law stood in the way of the banking company's ambitions. That changed in January 1994, when the Michigan Supreme Court ruled that banks can own insurance companies. It didn't take long for Comerica to spring into action. By October, the Detroit-based banking company purchased Access Services Inc., a small insurance agency which had been providing Comerica with insurance services on a third-party basis. In the following months, Comerica took a three- person insurance agency and built a sales force of 45 specialists serving the bank's 300 branches in Michigan. Last month, Comerica took another big step in the insurance business, closing a deal to buy Professional Life Underwriters Services Inc., a Troy, Mich.-based life firm that specializes in higher-risk customers. Today, Comerica Insurance Services is one of the most committed bank insurance operations in the country. "They are clearly getting into this business with both feet," said Kenneth Kehrer, a Princeton, N.J., consultant Unlike most bank insurance programs which offer a limited range of life insurance policies sold mostly through investment product representatives, platform workers, or direct mail, Comerica uses dedicated life agents to sell 27 life insurance products, six disability products, and long-term care products. The bank company is working with 13 life insurance underwriters, including Chubb, Jackson National, and Lincoln Benefit. Comerica's insurance operation is expected to generate $1 million in premiums this year, says Andrea Martin, the spirited president of Comerica Insurance Services Corp. While that may seem like pocket change for a bank with $35 billion in assets, Ms. Martin predicts the business is "going to grow a ton" in the coming years. While the bank got into the business primarily to deepen its relationships with existing customers, the program will ultimately be profitable, Ms. Martin says. She predicts that this business has the potential to generate a 20% pretax return on revenue, a belief built on the fat commissions that life insurance sales generate off first-year premiums. While Comerica is winning plaudits for its aggressive thrust into life insurance sales, some have questioned banks that build their insurance businesses with a traditional agency approach. Mr. Kehrer, for example, explained that banks have typically bought agencies without having a clear idea of how to run the operation. But Comerica is working hard to avoid the pitfalls that have bedeviled traditional agencies, such as unproductive salespeople and limited prospects for sales. The banking company has taken a more proactive approach to running its agency, building it with its own hires instead of inheriting a former owner's employees. A year ago, Comerica hired Nick Valenti, a 22-year veteran of Prudential Insurance Co. with plenty of experience running the firm's agency in Detroit. Under Mr. Valenti's guidance, Comerica hopes that each of its agents will sell 150 new customer households a year, about 50% more than traditional life insurance. Each agent is assigned to sell in several Comerica branches. The agents use their time in branch offices interviewing prospective customers, not waiting around for business. Comerica recently came up with a creative solution for dealing with a problem that life agents traditionally have had to endure - underwriters that refuse to insure high-risk customers. To expand its ability to place policies for customers, Comerica bought Professional Life Underwriters Services (PLUS), a company that acts as a middleman between underwriters and agencies. The 30-year-old company - which provides life insurance, annuities, and disability insurance products to independent insurance agents - specializes in placing policies for individuals who do not qualify for insurance under the standard underwriting guidelines. The 16-employee company, which had 1994 premiums of more than $7 million, will operate as an independent subsidiary of Comerica while providing support to the bank's agents. "It gives us an opportunity to expand our business," Ms. Martin says, adding that 5% of the insurance policies the bank sells will come through PLUS. She says that PLUS can give the bank the opportunity to find insurance for people whose circumstances make standard policies impossible. To do that, PLUS has relationships with underwriters that Comerica has not dealt with directly, she said. As part of Comerica's strategy, Ms. Martin is also working on a plan to market bank products to the customers of the more than 10,000 independent insurance agents PLUS works with. "I don't know that anyone's done this before," Ms. Martin says. "It would give us access to a new distribution arm." Industry statistics suggest that 10% of all insurance policies go to the "substandard" category that PLUS specializes in, says Lloyd West, chief underwriter for PLUS. But, Mr. West points out that substandard policies, with their higher premiums, tend to be more profitable. PLUS, which had 1994 premiums of more than $7 million, will continue to have 16 employees and place policies from the bank's insurance specialists. Comerica is taking steps to integrate its insurance reps with the rest of the bank. Life agents are urged to meet with bank managers and platform personnel weekly to build relationships and to learn how to prospect within the bank environment. The bank does have a cross-selling program to reward platform employees. So far, the bank hasn't tracked referrals for insurance products. But Ms. Martin says she expects two referrals a month. Ms. Martin is particularly interested in customers who don't often use bank branches. "It's a significant amount of people," Ms. Martin says. "We want to turn those targeted customers into quality referrals to our agents." While no targets have been set, Ms. Martin said she is looking informally for about 30% of sales to nonbank customers. While Comerica also has a presence in Texas, California, Illinois, and Florida, it is treading carefully before expanding into other states. Ms. Martin said she thinks one more state may be tackled in the near future. But that won't be Florida, which is still unfavorable to banks selling insurance because of court decisions. No more acquisitions are planned for the rest of the year, she says.
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