CHICAGO - Vowing not to repeat the mistakes that derailed past efforts to sell life insurance, bankers congregated here last week to learn from the few in their industry who have succeeded in this endeavor.

"Life insurance is the next major step in building fee income," said Roger R. Ludemann, a senior vice president with First Federal Lincoln Bank in Lincoln, Neb., who was the chairman of a two-day conference sponsored by International Business Communications. "The potential is extraordinary."

It's easy to understand Mr. Ludemann's enthusiasm for marketing life insurance, even if the jury is still out on whether banks can surmount legal and business obstacles and become a major presence in this industry.

For many bankers, life insurance - because of fat commissions it generates on first-year premiums - represents an opportunity to take the sale of fee-income investment products beyond mutual funds and annuities.

They are buoyed by studies that suggest middle-income Americans are being ignored by the traditional insurance agent, who no longer view their accounts as profitable and are therefore pursuing the upper 15% of the marketplace.

And many of the bankers have read or heard of consumer surveys that suggest that many Americans would be willing to buy insurance through banks.

"What banks have is the trust of the public," said Paul Feeney, a senior vice president with Jersey City-based National Westminster Bancorp and head of the banking company's nascent insurance operation. "You can walk down to it. Plus, a bank won't rip you off."

But Kenneth Kehrer, a Princeton, N.J.-based consultant, was on hand for a reality check.

He reminded everyone assembled in a conference room at the Omni Chicago Hotel that many banks experimented with marketing life insurance in the early 1980s, only to abandon their failing sales efforts.

Mr. Kehrer attributed the lack of success to banks' tendency to hiring failed insurance agents and then leaving them to their own devices in bank- lobby kiosks.

Today, he said, life insurance sales barely register a blip at most banks. A recent study conducted by his firm, Kenneth Kehrer Associates, found that when the premium value of life insurance sold through banks is measured as a percentage of total retail deposits, the best ratio a bank could muster was a paltry 0.13%.

But Mr. Kehrer was not without optimism. He argued that bank's success at selling fixed- and variable-rate annuities can translate to selling life insurance.

Several bankers who have succeeded in selling life insurance were on hand to share their secrets. In some cases, the approaches taken was almost diametrically opposed.

For example, J. Daniel Keppel, the insurance director at Dime Savings Bank of New York, has built a thriving business for savings bank life insurance by relying on platform employees with little expertise.

"Most bank CEOs laugh at the notion of platform employees selling life insurance," Mr. Keppel said. But he argued that the relative simplicity of the products allows branch workers, with some training and incentives, to sell the product.

By contrast, Richard L. Clark, president of financial services at Chevy Chase Bank, Maryland's largest thrift, with $8 billion in assets, said the key to building a solid insurance program is hiring dedicated insurance sales representatives who benefit from leads generated from other areas of the bank.

Currently, the three dedicated life insurance reps on Mr. Clark's staff generate 10 to 20 new leads a day, he said.

"If your bank sincerely wants to get into the insurance'll need to develop a strong, dedicated sales capabilities and stick to your strategy for five years," Mr. Clark said.

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