First Chicago NBD's agreement to market Hartford Financial Services Group's auto and homeowners insurance through direct mail could be a boon for the bank, observers say.

But First Chicago, which plans to quadruple its overall insurance business in three years, may have to withstand gripes from customers who are rejected for insurance policies.

The business can be quite lucrative "as long as banks are prepared to handle the flack," said John C. Larson, a consultant in Eden Prairie, Minn.

First Chicago said Tuesday that it will help develop mailers and will start sending them to its retail banking and credit card customers in September. Customers calling a toll-free number will be connected with representatives from the Hartford. The insurer will handle signups, administration, and claims.

On Wednesday, Wachovia Corp., Winston-Salem, N.C., said it would offer life, disability and long-term care insurance products from 10 major insurers to individuals and small businesses.

Mr. Larson and other insurance consultants say that First Chicago NBD and other banks can solidify customer relationships by adding insurance to their product lineups.

But there is the chance that customers snubbed by the Hartford could blame the bank and even take their business elsewhere.

Still, the upside potential is great, consultants say. Even though the commissions First Chicago NBD will draw on premiums are relatively small, sheer volume could make the business pay off, said Michael D. White of White & Associates, a consulting firm in Radnor, Pa.

"You don't make a lot of money off a check, do you?" said Mr. White. "If the products are priced right and you do them in sufficient volume you can make money."

The pool of candidates-more than 15 million retail and credit card customers-is certainly large enough.

Both Mr. White and Mr. Larson said that the Hartford is a solid partner for First Chicago NBD because of its impeccable service record. The alliance is part of a larger effort by First Chicago to expand its insurance business.

Last year the bank made $54 million in pretax profit from insurance, much of it in credit life policies through the bank's credit card company. It wants that figure to rise to $200 million in 2000.

A First Chicago NBD spokesman would not say how much the new initiative is expected to generate in earnings.

The direct marketing deal with First Chicago NBD is one of a half dozen that the Hartford has inked with banks in the last year. Those banks include Bank of America, National City, and California Federal. The Hartford is also known for its direct marketing relationships with thousands of older people through the American Association of Retired Persons.

The insurer is already the largest seller of variable annuities through banks, with $3.1 billion in premiums through 450 banks last year.

Its relationship with First Chicago NBD marks a "critical step in our plans ... to develop a business with the growing financial institution market," said Stephen Hasenmiller, the Hartford's senior vice president of personal lines, in a prepared statement.

First Chicago NBD is convinced that direct marketing will be increasingly important, said Thomas Kelly, a bank spokesman. It is considering offering life insurance and long-term-care insurance through that distribution channel.

It also plans to fast expand its offerings to rich people and midsize businesses through personalized relationships.

First Chicago NBD also plans to market products from the Hartford and other providers through its Internet site, telephone banking center, and in-branch kiosks.

First Chicago NBD Corp., the nation's eighth-largest bank holding company, has assets of $109.1 billion. It sells credit life, property/casualty, and term life policies.

The Hartford, one of the nation's oldest and largest insurance and financial services operations, logged 1996 revenues of $12.5 billion and has assets of $111.5 billion.

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