In an early glimpse at how banks are faring in life insurance, a recent study indicates that sales through third-party marketing companies were less than robust in 1996.

Third-party marketing companies supply banks with investment representatives to sell financial products. They also market mutual funds, annuities, and other investment products to banks.

Out of 10 companies surveyed by bank-insurance consultant Kenneth Kehrer of Princeton, N.J., the largest seller was Invest Financial Corp., which reported premiums of $15 million last year, up 15.4%.

To put this in perspective, Invest's 1,700 investment representatives sold an average of $8,823.52 each in premiums. Affiliated Financial Services, Englewood, Colo., was next in sales at $10 million.

"One of the reasons why annuities and mutual funds took off so fast in banks was because the third parties were really helpful," said Mr. Kehrer. "But they just haven't translated that success into life insurance yet."

To be sure, banks have only recently entered the insurance sales business, and need some time to work out the kinks. But for all the hoopla banks and third-party marketers have made about the potential for selling life insurance, Mr. Kehrer's numbers indicate banks have a long way to go.

They also reflect the decision by some major banks to leave their third- party marketing firms and internalize their insurance programs.

For example, Chase Manhattan Corp. took its business away from BankMark, Morris Plains, N.J. As a result, BankMark's life insurance sales dropped 25% last year, to $1.2 million.

Others saw better, but hardly stellar, results.

Duerr Financial Corp., Irvine, Calif., sold $6.5 million in life insurance in 1996, up from $6.3 million in 1995.

Some bankers said relying on third-party marketing companies is not the way to sell life insurance. Most are staffed by investment representatives who focus their attention on mutual funds and annuities, which are much easier to sell.

"A lot of these people don't want to get involved in a lengthy life insurance analysis," said Carl Formato, president of the insurance agency subsidiary owned by American Savings Bank, Irvine, Calif.

Some bankers said the difficulties in selling life insurance are almost over. One problem, according to Richard Bowman, president of U.S. Bancorp's insurance subsidiary, had been getting life insurance companies to design policies that would be easy for banks to sell, such as those with simplified underwriting requirements.

Mr. Bowman says such policies are being readily pitched to bankers now. "The '97 numbers won't be tremendous, but you'll see some growth," he said. "1998 is when things will happen."

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