On the basis of our survey of 50 insurers that sell through banks, we estimate that banks sold $174 million in new life insurance premiums last year. Premiums for new policies and renewals totaled $239 million.

This total, though up 53% from 1997, lags expectations-and is so far below other industry estimates as to be disconcerting.

For example, a study last year by Reagan & Associates for the Association of Banks-in-Insurance estimated that banks had $1.4 billion in individual life premiums in 1997. Datamonitor has published similar estimates.

To what do we chalk up the billion-dollar difference?

It is very difficult to obtain accurate information on bank sales of life insurance. Consistency of information is a problem, since some companies report annualized premiums while others report paid premiums. (We seek to obtain information on paid premiums.)

Even more of a problem is the fact that insurers might not know about all the premiums they sell through banks, since some of their general agents or independent brokerages might sell through banks without the insurer's direct knowledge.

But these problems cannot account for a difference of anywhere near a billion dollars.

The Reagan study and Datamonitor may have included accidental death and dismemberment or credit life in their totals. But the Reagan study has a separate estimate for "credit coverages" (another $2.8 billion) and labels its life insurance estimate "individual life premium." Accidental death and dismemberment is certainly not considered individual life by either banks or insurance companies.

Another source of the discrepancy might be the premiums deposited in bank-owned life insurance, the bank version of the executive compensation program called corporate-owned life insurance. The "dump-in" life insurance premiums deposited in these deferred compensation plans certainly should not be counted as life insurance sales, because banks buy it, rather than sell it.

My firm's estimates of life insurance sales are consistent with the life and health premiums reported by the banks in our new 1997/1998 bank insurance services benchmarking study.

In this study, 19 of the two dozen largest bank insurance programs provided detailed information on premium and revenue. They reported by product line-life (term, single-premium, whole, and universal life, as well as disability) versus property/casualty. They also repored by type of distribution-retail agents, licensed bankers, estate planners, mail, phone, and so on.

These 19 large banks had $47.2 in new life insurance premiums in 1997, of which $20.2 million was in single-premium products.

These banks sold $5.8 billion of fixed and variable annuities in 1997, 30% of the entire bank channel.

If they sold the same proportion of all banks' life insurance production, total new premiums through banks in 1997 would have been $157 million, of which $67 million would have been in single-premium life products.

This calculation yields estimates of the same order of magnitude as the data we have received from insurers. Again, there is over a billion dollars of missing premiums.

Banks sold $110 million of single-premium life products, up 20% from 1997. We expected this product to build momentum more quickly, because it is an investment product and is similar to the kind of products that have been so successful in the European bancassurance model.

Bank-sold premiums from products that require ongoing payments-term life and whole and universal life, including variable life-virtually doubled last year, to $143 million. Fifty-five percent of that total, however, was renewal premium-payments made on insurance contracts purchased before 1998.

In fact, then, banks are making significant progress in their efforts to sell life insurance. The gains actually rival the annual sales increases we saw early in the development of the annuity market.

But the misleading estimates from other studies can only serve to discourage banks about their real progress in building a significant life insurance business.

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