Insurance underwriters have yet to develop adequate products for the bank channel, bankers and consultants say.

Not only are insurance products not tailored to bank customers, but customers also have to endure a lengthy underwriting period.

"The products being used today were designed mostly for the agency distribution force of a hundred years ago," said Richard M. Libman, the president and chief executive officer of ICA Insurance Services Inc. in Scottsdale, Ariz.

Mr. Libman, an insurance consultant, was speaking during a panel discussion at the Financial Institutions Insurance Association annual convention here last week.

For example, customers sometimes have to wait up to three months until a term-life insurance policy is issued, Mr. Libman said. as many as 60% of customers lose patience and give up, he said.

Customers do not see term-life applications through to completion for many reasons. Sometimes they are disappointed in a quote that is higher than printed rates, Mr. Libman said, or their business is lost because of a lack of agent contact.

Some are turned off even earlier by a threatening-looking application, he said.

Banks should look for term-life products that are priced to allow more policy approvals, Mr. Libman said. If approval rates are not near 85%, then the product isn't priced high enough, he said. Mr. Libman also suggests flexibility in coverage to attract more customers.

Chase Manhattan Bank, which has one of the more developed bank insurance programs, is looking to shorten the underwriting period on the products it sells, said Peter Aharonyan, the president of Chase Insurance Group. "Underwriting is a particularly significant challenge for us. The ability to improve the speed would be a tremendous advantage."

He said the bank is also looking to provide customers with lower-cost, higher-value insurance products.

Mr. Aharonyan said he would prefer to deal with fewer carriers that can cover the whole range of insurance offerings.

Ideally, Mr. Aharonyan said, he would like to be able to cover 80% to 90% of customer needs through one insurance company. However, that's currently impossible, he said. "I cannot come up with a single provider who can provide the breadth of products we offer."

Now underwriters cover something approaching 30%, he said. But new products are on the way.

Underwriters are working with banks to develop products that would be tailored to bank customers, but distractions such as year-2000 concerns and a focus on hot annuity sales have diverted a lot of attention, said James Overholt, a senior consultant with Milliman & Robertson in Chicago.

"We're seeing a lot of new products on the drawing board ... and you're going to see a lot of interesting things," Mr. Overholt said.

Bradley J. Powell, the president of Jackson National Life's Institutional Marketing Group in Lansing, Mich., said his unit is working to create products dedicated to the bank channel. And he said there is a compelling case for banks to succeed in the middle market, which is largely underinsured.

Recently he met two fairly young men who did not have life insurance. Before either of them bought life insurance, Mr. Powell said, both men had come down with medical conditions that made them uninsurable.

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