In between bowl games, some will turn attention to New Year's resolutions. Here are some musings for life insurers, bankers, and other financial intermediaries to ponder as the New Year's prospect of real reform for financial services remains uncertain.

A coalition of insurance agents announced recently that it plans to sue the comptroller of the currency early this year over his interpretation allowing national banks to sell insurance. It's a case that should be lost.

Certainly, a "loss" will be another win for national banks and their customers. But more is at stake. The biggest "winners" could turn out to be the life insurance industry itself and its customers.

So far, the life insurance industry hasn't rallied support for this latest gambit by its agents. The American Council of Life Insurance, which has played an active role in the debates concerning the overlap of banking and insurance, may now recognize the inevitable results of Supreme Court decisions upholding the comptroller's interpretation of the National Bank Act to allow banks to sell insurance. It seems to have abandoned earlier frontal assaults on the comptroller. We can speculate why.

There are more persuasive reasons than the court's decisions.

Many insurance company executives have begun to hear from their advisers - and to concede privately - that allowing banks to sell life insurance may not be all bad. In fact, over the long term it just may be good for the industry - even if the prospect remains unattractive to agents over the short term. This seemingly asymmetrical conclusion is driven by several considerations.

The financial services industry already has experienced significant "homogenization" and will no doubt experience more. Some mutual fund complexes offer insurance and want your brokerage business as well. Investment banks are taking market share away from commercial banks in their core lending business.

Large life insurance companies promote managing your pension funds and will sell you their own mutual funds to boot.

So, with the banks standing as proxy, the insurance industry may have found a champion for full financial services modernization, to permit them - and others - to form diversified financial service organizations that would make it their business to sell you whatever you want, or think you need, including insurance. (Some insurance companies already have formed captive trust companies to offer services traditionally offered by banks.)

Second, there's been a lot of talk - regrettably, less action - in recent years in Washington about the globalization of the financial services marketplace. The U.S. capital markets operations of National Westminster Bank, the purchase of European insurance companies by General Electric, and AXA's stake in Equitable are obvious examples.

Couple this with advances in technology that permit round-the-clock trading to proceed unabated by time zones or geographic boundaries and the makings of a true "global economic village" become apparent.

With enormous pools of assets to work, the big insurance companies are not unaware of these developments. They know the U.S. market for traditional life insurance is mature. Demographics paint much of the picture. As our society ages (and many baby boomers think they have all the life insurance they need), insurance companies are looking to expand market share here and searching for new markets elsewhere.

One way to expand market share is to buy it. So, like the banking industry, the insurance industry will continue to consolidate in the expectation, of course, that scope and scale will improve efficiencies and margins.

The big American insurance companies also are pursuing new markets elsewhere. As examples, they have lobbied aggressively to do business in Japan, obtained tentative footholds (officially sponsored joint ventures and limited licenses are two examples) in China, and focused on a potentially huge, underserved market in India.

The American insurance industry should continue to position itself to take advantage of opportunities throughout the world. That may mean affiliating with banks here or abroad to facilitate further inroads into new markets.

Finally, many large U.S. life insurance companies are saddled with captive agency distribution systems that are inefficient and unnecessarily expensive when consumers can shop for insurance by dialing toll-free 800 numbers, accessing the Internet via PCs, or calling their Charles Schwab office - avoiding face-to-face meetings with agents. They know of the success banks have had selling annuities, and recognize the value embedded in the data bases of financial information banks maintain about their customers.

And, according to one study, 93% of life insurance chief executives think barriers to banks entering the insurance business will continue to fall. Some, at least, perceive this threat to be a glass that is half full rather than half empty, wondering whether selling their insurance products through banks could become an important strategic advantage to develop "supplemental" distribution channels.

The more knowledgeable insurance CEOs are impressed by the European "bancassurance" model, the sale of insurance by banks. They are justified in looking across the Atlantic for direction. One study of this model concludes that the incidence of selling ordinary life insurance is 25 times more likely, and that selling expenses decline by more than half, if the policy is sold by a banker rather than a career insurance agent.

The U.S. economy, too, works best when it functions free of unduly burdensome regulation - when all businesses, including insurance and banking, have reasonable access to open markets. It works best when the promises and perils of free-market competition run their course.

It's time for some revolutionary New Year's resolutions to be embraced by the financial services industry, including insurance companies. Surely they recognize that open markets and unfettered competition are the hallmarks of an efficient economy.

Maybe the threatened lawsuit by the insurance agents should go forward, and go nowhere - at this writing, the likely result. A loss of this kind would produce a win for all participants in the financial services marketplace. It would allow them to get on with the task of implementing long-overdue structural reform. It would permit them to offer a broader array of financial products. And it would enhance competition, both here and abroad, to benefit wholesale and retail customers alike.

All in all, not a bad won-loss record to contemplate for the New Year.

Mr. Byrne, a partner with the Richmond, Va., law firm of LeClair Ryan, was general counsel of the Federal Deposit Insurance Corp. during the Bush administration. He also is a former senior vice president and general counsel of New York Life Insurance Co.

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