As 1996 comes to a close, there seems to be no turning back for banks engaged in the marketing of insurance.

That's a far cry from a year ago, when American Banker published its last supplement devoted to insurance sales. At the time, many banks were openly questioning whether this business made sense for them.

Bankers are a risk-averse lot, and many wondered whether the regulatory climate and the economics of the business made the sale of insurance worthwhile.

For those seeking to push insurance sales beyond the banking industry's credit-related origins, the focus was on term and whole life - products that generate large commissions during the first year and less servicing than other policies.

Thus, the title of the last year's American Banker supplement - "Life Insurance: The Next Step in Fee Income? - represented the industry's mood and focus of late 1995.

But in the past year, much has changed.

A number of banks - including NationsBank Corp. and Comerica - have began making a push into other types of insurance, such as homeowner's, commercial property and casualty, and even automobile.

While the competition is stiff, with many large insurers selling directly to customers, the possibilities for banks to leverage their current customer bases are intriguing.

"These are products closely related to traditional banking," said Kenneth Kehrer, a Princeton, N.J.-based consultant who advises a number of banks engaged in insurance sales. "Banks are big lenders to companies, homeowners, and automobile buyers, and these types of insurance are must- buy products."

Moreoever, many leading banks, including First Union Corp. and NationsBank, are launching direct-marketing efforts to lower insurance delivery costs.

The year also saw an increased willingness on the part of major life insurance underwriters to cast aside old allegiances with traditional agents and work with banks.

"They have been unhappy with the agency system since God was a small child," said Jack D. Cussen, a Summit Bancorp senior vice president who oversees the bank's insurance operation. "But they realize that now is the time to make a break."

And remember those pesky stand-alone insurance agents who spent years fighting bank incursions on their turf? Well, this year a growing number were only too glad to sell out or join banks working to build their insurance businesses through acquisition.

In recognition that banks are facing wider and more complicated decisions in the marketing of insurance, we have titled this year's supplement "Insurance: Weighing the Options."

During the past year, the legal and regulatory barriers that were keeping many banks on the sidelines also began to crumble.

In March the Supreme Court confirmed, in a case involving Barnett Banks, that federally chartered banks had the authority to sell insurance from towns with fewer than 5,000 people.

But questions still remained about how widespread bank marketing efforts could be from those small towns.

The Office of the Comptroller of the Currency helped answer that question last month in a ruling that authorized First Union Corp. to use its small-town agency to sell insurance anywhere, including in branches of First Union National Bank.

The ruling by the bank-friendly OCC indicates that similar authority is in the offing for other banks.

Though one article in this package reports that many insurance agents and state insurance commissions still intend to try to use state law to fight the Supreme Court and the OCC, it's clear that banks have finally gained the upper hand in their war of attrition against the independent agents.

At the time of the OCC ruling, Kathleen W. Collins, Washington counsel for the Financial Institutions Insurance Association, exulted: "It's time to go sell insurance!"

For banks that chose to take up that cry, we hope that the articles in this supplement give some helpful insights.

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