Over the past 12 to 18 months, the nation's major banks have shown a marked increase in interest in the insurance business. Several forces are behind this trend.

First, investment products marketing has begun to mature at many institutions, and moving into the insurance arena is the logical next step.

Second, there appears to be an insatiable appetite for fee income, especially in the shrinking-interest-margin environment that we are experiencing.

Finally, many banks have embraced a strategy that calls for meeting a broader set of the customer's financial services needs. An important step in fulfilling this mission is to meet the customer's insurance needs by offering a variety of quality insurance products.

Unfortunately, many banks continue to view being in the "insurance business" as little more than the pursuit of a random collection of seemingly unrelated programs. This approach is destined to disappoint customers and bank management alike.

Some of the leading forward-thinking banks have come to understand that the best chance they have to be successful in the insurance business is to pursue it like other retail products: as a true line of business. Ultimately, a line-of-business approach is the only way to generate the necessary fee income levels and customer relationship value to make the effort worthwhile.

To understand the elements of a line-of-business approach, one need look no further than the current stable of retail banking products. Several common elements can be found.

First, many variations of the product are typically available to meet the different needs and preferences of a diverse customer base. This is true for deposit accounts, credit cards, and mortgage loans. The same strategy should apply to insurance. The product line must be broad enough to address the needs of large segments of the customer base.

As with other bank products, there must be a commitment to use data base marketing systems. Most banks are making huge investments in systems that can facilitate the cross-selling of products and services to existing customers. However, for some reason, insurance marketing is seldom afforded the benefit of these investments.

The delivery system infrastructure must also be leveraged. Today's savvy banks market credit cards through the mail, branches, media advertising, statement inserts, etc. In the near future, these channels will be expanded to include automated tellers, home banking systems, video bankers, and interactive television. Distribution of insurance should be no less comprehensive.

Finally, customer service and administrative systems should be centralized wherever possible. A bank would not have six different credit card products running on different systems. Such an approach is no more desirable for insurance products.

Fortunately, a number of prominent institutions are beginning to set the pace. For instance, New York-based Chemical Banking Corp. is well on its way to building insurance into an important profit center. Through its highly publicized joint venture with Conseco Inc., Chemical is building the infrastructure for multichannel distribution on a national basis.

PNC Bank Corp., Pittsburgh, is another superregional making the commitment. PNC's analysis of the opportunities in insurance has led to the determination that not only do different products apply to different customer segments, but a wide range of distribution channels and delivery systems must be used. As a leader in the branchless banking concept, PNC is also laying plans for integration of insurance products into their use of high-tech delivery systems.

First Union Corp. made a commitment to the insurance business several years ago. Today, the Charlotte, N.C.-based banking company has one of the most extensive bank insurance operations in the country. A full range of life, health, and personal lines are marketed throughout their seven-state region using in-house agents and administrative systems.

There are, of course, other good examples of commitment and leadership in insurance marketing, and more are sure to materialize in the future. In the long run, if banks want to be successful in the insurance business, they will have to apply the model that has been used successfully with other retail banking products. And with each new product introduction, the first step has always been commitment.

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