Like a lot of insurance companies, Allstate Life Insurance Co. would like to sell more than annuities through banks.

But like its rivals, Allstate is finding that generating life insurance sales through this relatively new channel is easier said than done.

"This is a long, educational process," said Craig Stoudnor, president of Laughlin Retail, a unit of Laughlin Group, the Beaverton, Ore.-based bank investment marketing company that Allstate bought in October 1995.

"Banks will be very effective in selling life insurance, but like the introduction of mutual funds and investment products, there's a learning curve," Mr. Stoudnor said. "Life insurance is certainly more complex than an annuities sale, which is transaction-based. It's going to be a long haul."

The acquisition of Laughlin certainly gives Allstate a strong entree to banks. With 129 bank clients, Laughlin is one of the largest of the investment services suppliers known as third-party marketers.

These companies-other big players include Invest Financial Corp. and Marketing One Corp.-provide a host of services to banks, including hiring and training sales representatives and selecting and monitoring products.

Over the past year, Laughlin has built a stable of 20 banks that sell a variety of life insurance policies, including LaSalle Bank, Chicago; PNC Bank, Pittsburgh; Sanwa Bank Ltd., New York; and SunTrust Banks Inc., Atlanta. But annuity sales are still the bulk of its business.

If it succeeds in using banks to reach life insurance customers, Allstate will likely become a model for an industry bent on finding new markets.

"On the life side, there is no major player" selling through banks, said David Shapiro, principal of Shapiro Consulting Group, Los Gatos, Calif. More banks would like to get into the market, but "they look at their overhead on the sales and processing side and they say, 'Yeah, annuities don't look so bad.'"

Neither Laughlin nor Allstate makes sales numbers public, but Mr. Stoudnor made it clear that annuities sales will continue to be the bread- and-butter of bank insurance products.

Banks account for about one in five annuity sales, said Mr. Shapiro. One-third of all fixed annuities and 12% of variable annuities are sold through banks.

By contrast, banks account for a negligible amount of life insurance sales. Insurance companies see both great potential and great obstacles.

The trouble is that bank customers have an inherent preference for savings products, said Robert M. Baranoff, manager of specialty distribution services at Limra International, Windsor, Conn.

Annuities have "the appeal of saving for retirement and of tax advantages, the natural fit of savings vehicles with banking culture, and the lack of underwriting or claims hassles," said Mr. Baranoff.

Allstate ranked eighth in annuity sales through banks in 1994, the most recent year available, said Mr. Baranoff; that year, the leader was the Hartford.

Although profitability in life insurance sales may be years away, banks and insurance companies alike see bank customers as a natural for life insurance sales.

"The general consensus with the banking industry is they have to get into it if they're going to be full-service financial services institutions. They haven't fully addressed risk management," said Mr. Stoudnor.

Despite a pervasive argument for banks' sticking to the annuity business, Mr. Shapiro said, "going forward you will probably see multiple (insurance) products."

In the meantime, there may be a gulf between what banks say they want and what they are willing to jump into.

"The majority of banks we talk to want to be in this (life insurance sales), but the vertical structure makes it difficult. The line managers often say no, even if the CEO is saying yes," said Mr. Stoudnor.

And salespeople can be even tougher to convince. "There are predispositions about life insurance. Some reps say life insurance is terrible-you get a $1,000 premium, then have to pay out a $1 million claim. You get the same biases in the general public," he said.

But Mr. Stoudnor is undeterred.

He joined Laughlin Direct earlier this year from another Allstate subsidiary, Lincoln Benefit Life, succeeding Michael Denton.

He immediately targeted three markets for bank life insurance sales:

General depositors.

Businesses: 401(k) and payroll-deduction plans, senior managers and those in need of business continuation help.

Affluent customers, including those with estate plans.

He acknowledges that selling life insurance requires greater sales sophistication, which in turn means higher overhead. But the payoff will mean broader customer relationships.

Laughlin administers insurance policies and helps banks choose which products to offer. It also acts as the sales arm for three major underwriters-Allstate, Mutual of Omaha Insurance Co. and American Enterprise Life Insurance Co., a unit of American Express Co.

"When you have successful relationships, others will follow," he said. u

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