Bank insurance programs continue to be plagued by bankers' hesitancy to refer their customers to a bank's insurance agents, according to participants in a recent conference.

"The retail people are very protective of their customers," said Jack D. Cussen, senior vice president of the insurance services group at Summit Bancorp, Princeton, N.J.

Mr. Cussen made that point after participating in a panel discussion at the annual banking symposium last week of the Bank and Financial Analysts Association in New York.

Panelists said bankers do not trust insurance representatives, and they do not want to lose a part of the customer's wallet. To succeed, banks must find a way to solve that problem, they said.

The panel discussion also featured consultant Kenneth Kehrer, who said that banks that sell insurance are making the same mistakes they made in the early 1980s, when the industry was making a similar push into insurance sales.

A recurring problem is "chairman-to-chairman deals," he said. In such deals, top bank and insurance executives might seal a selling agreement over a round of golf-without bothering to get support from the mid-level ranks at the bank.

Many banks entered partnerships with insurance agencies in the early 1980s, only to see the programs fail within two years. They then turned their attention to selling annuities and mutual funds.

Because profits from these other products have been lower than anticipated, banks in recent years have turned back to insurance as a source of fee income, Mr. Kehrer said.

Mr. Kehrer and Mr. Cussen said representatives in other parts of the bank often see insurance sales representatives as interlopers who want to fleece loyal customers and take away business.

Sometimes bankers are not aware that the insurance reps even exist, said Mr. Cussen, whose bank has sold life insurance for more than five years.

"A good portion of our people don't even know we sell insurance," he said. "It's a matter of time before we are accepted" as life insurance sellers.

Stockbrokers at banks have a reputation for freezing out the insurance sales force, Mr. Kehrer said.

"The stockbrokers won't refer their clients," he said. "They want all the money."

As a result of the cultural problem, insurance reps get far fewer leads than investment salespeople, Mr. Kehrer said after the panel discussion.

Another problem hindering bank insurance programs is the quality of banks' insurance representatives, Mr. Kehrer said.

Banks pay lower commissions than nonbank agents get, on the theory that the agents get more referrals at banks. But that policy tends to attract mediocre agents, he said.

In one case, Mr. Kehrer said, he and a bank executive tried to find out why a fired insurance rep had done so poorly at the bank.

They found a stack of old leads that the agent had not bothered to pursue.

Summit's insurance business made $15 million in revenues last year and is profitable, Mr. Cussen said. But it is not so much a profit center as a hedge against the bank losing customers.

Mr. Cussen said, "We think of it as a relationship builder," and that selling insurance can "make it more difficult for that customer to leave the bank."

Another panel participant, Scott E. Reed, chief financial officer of BB&T Corp. of Winston-Salem, N.C., said that his company's insurance business is indeed a profit center.

The bank made an $8 million pretax profit last year on $40 million in revenue, and Mr. Reed said it plans to produce $110 million in revenue and a $38 million pretax profit by 2002.

He said BB&T, which has acquired more than 20 independent agencies over the past several years, has built one of the 25 biggest agencies in the nation-bank or nonbank.

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