To counter increased bank and brokerage insurance marketing programs, credit unions of all sizes are intensifying their sales efforts.

Large credit unions are looking at creating or strengthening their own agencies, midsize credit unions are expanding product lines and services, and smaller operations are using outside marketers to build sales.

"I think credit unions are going to pick up on this faster than banks will," said Robert P. Condon, head of the brokerage unit at $4.3 billion- asset Fidelity Federal Bank, a thrift in Glendale, Calif.

Historically, credit unions have faced fewer restrictions than banks in selling insurance. Consequently 36% of credit unions but only 12% of banks offered property and casualty insurance in 1996, the latest year for which data are available, according to a study by American Brokerage Consultants Inc. of St. Petersburg, Fla.

The gap was even wider in universal life, with 83% of credit unions but only 36% of banks offering the product.

Data are not available, however, on whether credit unions actually sell more insurance-either in dollars or sales volume-than banks, which since 1996 have obtained wider powers to do so.

Mr. Condon, who heads one of the few profitable bank programs, said that increasingly credit unions are seeking information about building and integrating insurance programs.

The growing interest in insurance expressed by credit union service organizations, the marketing arms of credit unions, is reflected in these organizations' quarterly magazine, NASUCO Connection.

In the last four issues, major articles have dealt with growing long- term-care insurance, bringing bancassurance to the Internet, and how to value an agency targeted for acquisition.

"I see the trend increasing," said Robert Dorsa, president of the Newport Beach Calif.-based National Association of Credit Union Service Organizations.

"They have just as much opportunity to offer these products and services," said Valerie Jordan, a Belchertown, Mass.-based consultant.

She said members are more likely to visit their credit union than bank customers are to visit branches.

Ms. Jordan likens credit union's sales of insurance to the beginnings of insurance itself, when people in similar situations-such as shipbuilders, widows, and orphans-banded together. "They had a reason to get together."

That common bond creates a trust, making insurance an easier sell for credit unions than at banks, said Tristram Coffin, president and chief executive of CU Serve, the service organization arm of $900 million-asset Hudson Valley Federal Credit Union, Poughkeepsie, N.Y.

"The relationship we're leveraging often is, I think, a much stronger one," Mr. Coffin said. "We're not a bank, and I think we're much better."

He said his credit union has added long-term-care insurance to respond to an aging population and has developed a referral program with an independent property and casualty agency.

It already sells life insurance, annuities, and other products through three sales representatives who are dual employees of the CUSO and of Financial Network Investment Corp. of Torrance, Calif.

The credit union widened its product line to compete with banks, brokerage companies, and insurance companies, Mr. Coffin said. Customers' desire for the products also has changed the credit union's approach to the business.

"We may consider forming our own insurance agency at some point-it's something we're considering," Mr. Coffin said.

Twelve years ago, Hughes Aircraft Employees Federal Credit Union, Manhattan Beach, Calif., first offered members insurance products.

Initially, sales of property and casualty products were slow but steady. Over the past six years, the pace has quickened, said William B. Kay, chief executive of the credit union's service organization.

Hughes is widening its offerings and sales methods while developing insurance programs for smaller credit unions. It is one of the few credit unions that has its own property and casualty agency.

Mr. Kay said Hughes' experience shows that customers need to be educated before sales can grow. Initially, he said, they were not expecting insurance offerings from a financial institution.

"It was sort of a new trend for people to purchase homeowners and auto in financial institutions," he said.

"It's been profitable for us, and we've got an awful lot of customer satisfaction."

As they become more comfortable with initial insurance offerings, customers tend to look for other products, and life insurance sales are blossoming, he said.

Its strategy includes taking its expertise to its smaller brethren. This year, Mission Federal Credit Union in San Diego will be the first to use Hughes property and casualty services, Mr. Kay said. Programs will differ by institution but can be a turnkey operation, or a credit union can pick and choose which services they'd like.

"We bring management expertise and help them manage the CUSO process," he said. The backroom and administrative help is welcome, he said.

"In the beginning the smaller credit unions saw these (arrangements) as a threat" to their assets and their existence, NACUSO's Mr. Dorsa said.

Now credit unions realize these partners understand their needs, he said, predicting a rush of these marketing arrangements in insurance in the next few years.

"We're going to see the development and creation of the super CUSO," he said.

As CUSOs develop these relationships and more create agencies, they will have great opportunities in insurance, Ms. Jordan said. But they are also "in their infancy" in the business, as banks are, she said.

Credit union executives are bullish. As Hudson Valley's Mr. Coffin said, "I know a lot of people who hate banks, but I don't know any who hate credit unions."

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