Great-West Life and Annuity Insurance Co., finding the annuity provider market too crowded, is concentrating on the wide-open life insurance field in its bank distribution and counting on a big lift from acquisitions that two of its bank partners have made this year.

The Englewood, Colo., company has been selling two simplified life insurance products - one term, one whole life - through its bank partners since 1997. It took Huntington Bancshares Inc. as its first bank partner in 1997 and added U.S. Bancorp in 1998 and Fifth Third Bancorp in 2000, said Bob Shaw, senior vice president of individual markets for Great-West.

In January, Milwaukee-based Firstar Corp. bought U.S. Bancorp, of Minneapolis, and in April, Fifth Third bought Old Kent Financial Corp. Great-West is already taking advantage of these deals by adding Firstar and Old Kent branches to its distribution network.

Cherie August, assistant manager of marketing for Great-West, said: "Our research showed that customers are underinsured and that they want the coverage. But they also want a product that can be purchased simply. They want a transaction that can be conducted with ease."

Mr. Shaw said simplified products that are not underwritten are a good fit with bank sales. The bank-branch customer answers a set of questions "that could lead to a sale in 10 minutes."

Great-West is seeking more sales deals with banks, "but we're really focusing on the banks that we have first," Mr. Shaw said.

It has no plans to distribute its annuities through banks, a surprising position given that banks have been successful at moving annuities and are still minor players - if that - in life insurance distribution.

Individual life sales through banks were just $422 million last year, against $31 billion through banks for annuities, according to Kenneth Kehrer Associates, of Princeton, N.J.

"If the opportunities arise, we'd take a look" at selling annuities, Mr. Shaw said. "But quite a few very good annuity carriers are already in the channel."

Peter Dunlap, the national sales manager for retail life at Huntington Insurance Agency Inc., a Crescent Springs, Ky., subsidiary of Huntington Bancshares, said life insurance presents the better opportunity. "Everybody needs it and people are grossly underserved," he said. "With an annuity, people can also put their money in a CD or mutual funds."

He said banks realize that they have to sell life insurance if they are to round their offerings.

John A. Martin, a consultant in Frelinghuysen, N.J., and a former senior vice president of strategic planning at Chase Manhattan Corp.'s insurance group, said selling life insurance first is a good way to enter the bank-annuity field.

"If the immediate opportunity is through life sales, they can establish a relationship with a bank that way and then offer annuities," Mr. Martin said. "The life side is clearly more open. I am not sure that the annuity opportunity is gone, but it's definitely difficult to get into."

However, Mr. Dunlap acknowledged that life insurance is a confusing product. That's why Huntington's branch employees only offer the simplified Great-West products.

"Once the bank's branch staff starts to get used to it, they'll start to sell some of the more detailed products, like long-term care," Mr. Dunlap said. "But it's going to take some time. It starts with the bank considering insurance a core product, and then it continues with the sales staff understanding the product, which they will do."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.