Dedicated insurance agents at banks are not producing hefty revenues for the banks or themselves.

A study of 54 bank programs-18 of which had dedicated insurance representatives-found that last year dedicated agents generated about $5,412 in monthly revenues and pocketed about $3,980.

By comparison, investment product representatives generated about $22,751 each in monthly revenues.

The 1998 Kehrer-Alliance Capital Bank Investment Services Compensation Survey found that older programs fared worse than newer ones: those six years old or older had a slight falloff in agent revenues, despite increased incentives.

"It's disappointing," said Kenneth Kehrer, the Princeton, N.J., consultant who conducted the study for Alliance Capital, the New York-based asset management company. The results may spur banks to reevaluate their payment and sales models, he said.

The survey did not distinguish between life insurance and property and casualty agents. But because many banks began their insurance programs by focusing on life insurance, Mr. Kehrer said, the results may be skewed toward that segment, where revenues have been slower to grow.

According to the survey, the average portion of the sales commission paid to agents was 34% in programs less than three years old, 38% among those four to six years old, and 43% in those seven years or older.

Banks have probably boosted the compensation percentages to keep better agents, Mr. Kehrer said.

But higher payout percentages actually stifle growth because there is less money available to pay service and support staff, said John M. Wepler, a principal with Marsh Berry Co., a Concord, Ohio, consulting firm that works with bank and nonbank insurance agencies. Without that help, agent attention is diverted from sales to service, he said.

"This is a classic example of what the insurance industry has overcome but the banking industry has not," Mr. Wepler said.

Some more successful agencies actually pay as little as 24% of the gross commissions to sales representatives, with the difference going toward these key support people, Mr. Wepler said.

However, many banks continue to see service people as clerks and try to shrink their income, he said.

The fact that banks are paying agents more even as the agents sell less may indicate that banks are having trouble keeping quality agents or attracting "the best and brightest" younger agents, Mr. Kehrer said.

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