Though sales of variable life insurance sales were down in 2000, the bank channel’s share has been on the rise, and Nationwide Financial is right in line with that trend.

The Columbus, Ohio, company collected $36 million of variable life premiums — 6% of its total variable life sales — through banks last year, up 73% from 1999.

Matt Riebel, president of Nationwide Financial Distributors Agency Inc., which provides Nationwide products to banks, said, “We’ve been pursuing the variable life market for the last two years and we’re starting to see a payoff.”

Nationwide distributes its variable life product through 350 banks and is looking to expand what is now a six-member team of field-sales representatives.

Nationwide remained the No. 2 seller of variable annuities through banks, with $2.347 billion in 2000, up 18% from 1999. Hartford Life stayed on top, with $3.493 billion.

Like many insurers, Nationwide’s fourth-quarter sales of variable annuities fell. They were $516 million — a 15% drop from the third quarter. Industrywide, bank sales of variable annuities fell 7% in the fourth quarter, but Mr. Riebel disagreed with observers who blamed the stock market’s volatility.

Variable annuities are “a long-term investment,” and sales numbers are “more of a dynamic of the sales marketplace,” he said. “We had the week of Thanksgiving, the week of Christmas, and other holiday festivities.”

Bruce Ferris, vice president of investment product sales at The Hartford Financial Services Group in Simsbury, Conn., was among those who faulted the stock market for the fourth-quarter slowdown.

“There was an unprecedented amount of money in money market accounts. People sat on the sidelines,” he said.

Nationwide Financial’s sales of fixed annuities through banks were $510 million in 2000, up from $314 million in 1999, and $212 million in the fourth quarter, up from $121 million in the third quarter.

On the whole, variable life insurance sales through banks were up in 2000, but the product remains a small part of banks’ insurance business overall, said Kenneth Kehrer, president of Kenneth Kehrer Associates, a bank-insurance consulting firm in Princeton, N.J.

Mr. Kehrer estimates that banks had $551 million in life insurance premiums in 2000, against $379 million in 1999, and that roughly 1.6% of life insurance sales came from banks last year, compared with 1.2% in 1999.

“For years, people said banks would be the 800-pound gorilla in life insurance,” he said. “That’s been slow to materialize. Both the insurance and banking industries have been disappointed, but we are seeing growth.

“Life sales dropped 4% overall in 2000, but banks gained, so it’s all relative. There is a lot of consumer reluctance. They’d rather invest. The bank’s job is going to be to show people they need to have life insurance.”

Michael White, president of Michael White Associates, a bank-insurance consulting firm in Radnor, Pa., said that, while bank business in variable life insurance is growing slowly, “banks are in the driver’s seat because they have the relationship with the customers.”

Life insurance by itself, he said, is the best opportunity in the bank-insurance market. “When you see statistics that show 40% of Americans don’t have life insurance, it becomes obvious that no one has reached the average person.”

Plus, Mr. White said, “since we’ve hit a rough patch in the stock market, there might be a better chance of getting someone to buy life insurance than a mutual fund.”

Mr. Riebel said banks want to sell variable life. “Our variable life product is fashioned to be used as an investment vehicle, so a financial consultant should feel comfortable with it.”

He also said Nationwide’s variable life insurance product should fit into a financial consultant’s suite of products, because the same investment options available in its variable annuities are available in the variable life product.

Mr. Kehrer said financial consultants’ sales of life insurance lines had the biggest percentage-point growth from 1997 to 1999. The average bank-based consultant generated $8,379 from sales of life insurance products in 1999, 3.5 times more than in 1997, according to a study by the life insurance research group LIMRA International and Mr. Kehrer’s firm.

“Financial consultants also sell mutual funds and annuities — they’re stockbrokers at a bank, and have some disinterest in selling life insurance,” Mr. Kehrer said. “Financial consultants are motivated by helping their customers. If they help the customer, the customer will stay loyal. So when a financial profile is created for the customer by the consultant, have him them ask about life insurance. Hopefully, you’ll open some customers’ eyes that they should have life insurance.”

Mr. White said the life insurance market will only mature once banks’ sales training does.

“It isn’t about the product — it’s about getting salespeople to reach out to the right group of prospective customers and explain why the product is necessary,” he said. “Also, the bank — and the insurer — has to let everyone — the customer, the employees and the bank as a whole — know why it’s important for the bank to sell the product. Salespeople aren’t going to conferences in Boca Raton. They aren’t at the shareholder meetings. They’re too busy doing their jobs. Someone has to tell them.”

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