Banks are finally getting some solid results in their long struggle to become significant sellers of life insurance, and the results are coming from single-premium products.
The main reason is that these products, unlike traditional recurring-premium life, share many characteristics with annuities.
In addition to there being only one premium, the sale can be conducted as an asset transfer - like moving money from a certificate of deposit or a mutual fund to an annuity, as banks have long recommended.
Recurring-premium life, on the other hand, functions more like a car payment or mortgage payment, in that the buyer must reduce consumption of other goods and services over time to make the periodic premium payments.
Banks generated $77 million of "weighted" individual life and health insurance premium in the first half, a 45% jump from the same period last year. Health insurance products made up less than 5% of the total.
New first-year life premium actually went up 76%, to $218 million, but $157 million - almost three-fourths - came from sales of single-premium products.
Life industry sales statistics discount single-premium products 90%, so life "sales," as the industry calculates them, are equal to 100% of first-year recurring-premium plus 10% of single-premium products. The weighted premium total of $77 million was only 35% of the $218 million of actual premium from new life sales that banks produced between January and June.
First-half sales of single-premium life almost doubled from the $79 million sold during the first six months of 2000. Universal life contracts took in the lion's share of single-premium sales (64%), with whole life contracts accounting for 21%. Only 15% was invested in variable life products.
Bank sales of recurring-premium life products, however, were not left behind; they increased a robust 36%, to $61 million. Variable life and variable universal life represented 74% of recurring-premium sales through banks. Term life products were 16% of the premium, and the rest went to universal life (5%) and whole life (5%).
Reasons for the improvement. Discussions with insurers and our bank-level research point to several reasons for the sales gains.
First, banks have been reengineering their delivery methods. To serve the middle market - which the life industry has largely been ignoring - banks are turning away from the traditional kitchen-table-agent model. Instead they are training their bank platform staff to meet the needs of these customers.
They are also building up advanced agent sales forces to address the life insurance needs of wealthy customers and small-business owners. In addition, they are finding ways to help their series 7-licensed investment sales staffs sell life insurance without forcing those brokers to share sales commissions with life insurance specialists, either from the insurer or on the bank's staff.
On the product side, insurers are responding to banks' needs by simplifying their products, the application process, and underwriting. Rather than shunning single-premium products, banks have embraced them as a wealth transfer vehicle.
Bank market share. Other life insurance distribution channels did not fare so well during the first two quarters of this year. According to Limra International Ltd., the trade association for life insurance marketers, the total weighted life insurance premium industrywide was $4.2 billion in the first half, down 3% from the same period last year.
Banks were able to nearly double their share of life insurance sales in the United States, to 1.8%. While that is still small, bank sales are becoming increasingly important to the growth of the life insurance industry. Last year banks accounted for 11% of the increase in life sales from all channels. This year the growth at banks has helped offset a decline in other channels.
Sales leaders. The three insurers with the most life premiums sold through banks during the first two quarters this year sold only single-premium products.
Liberty Life Assurance of Boston once again produced the most new life insurance premiums through banks, with $45.4 billion of single-premium life sales, 90% more than a year earlier.
Allstate and Aegon posted large increases in their single-premium sales (361% and 287%, respectively) and leapfrogged over CUNA Mutual and Hartford, which were ranked second and third a year earlier. Early this year Aegon introduced a modified-endowment contract for the bank market with a special marketing campaign.
Allstate's Glenbrook Life introduced a simplified product backed by wholesaling support. A focused promotion at California Federal Bank, one of Glenbrook Life's primary bank distributors, helped boost sales, and Glenbrook Life has leveraged those results to build its distribution through other banks.
Though Nationwide captured fourth place and increased its new life premiums from banks by 173%, the lion's share of its sales, in contrast with Liberty Life, Allstate, and Aegon, came from recurring-premium products. Therefore, Nationwide had the most weighted premium through banks - $19.4 million, almost three times more than in the year-earlier period.
CUNA Mutual, which had the most weighted premium sold through banks during the first half of 2000, lost ground as its weighted premium slipped 38%. All of CUNA Mutual's sales were in recurring-premium products.
Hartford almost overtook CUNA Mutual for second place in weighted premium. Hartford's rose 554%, while its total premium went up 20%, to $13.7 million.
Hartford ranked fifth in single-premium sales ($7.2 million), third in recurring-premium sales ($6.5 million), and fifth in total new life sales through banks.
Lincoln National's First Penn-Pacific subsidiary and Golden Rule are the other two major providers of single-premium life products to banks. First Penn's bank sales were down 21%, while Golden Rule's were up 64%. First Penn and Golden Rule were ranked fourth and sixth, respectively, in single-premium sales. Both companies underwrite life insurance products with long-term-care benefits incorporated in the policies.
American General ranked fourth in recurring-premium product sales, at $3.9 million, up 11% from the same period last year. Its recurring premium total was enough to capture fifth place in the weighted premium rankings, even though it was ninth in total new life premium.
Mr. Kehrer is the president of Kenneth Kehrer Associates, a Princeton, N.J. bank insurance consulting firm. 
