The Virginia Bankers Association, which already offers a range of insurance products through its network of agencies, has agreed to sell life insurance from the Savings Bank Life Insurance Co. of Massachusetts through its member banks.
Under the agreement announced in December, the more than 140 members of the Richmond-based bankers association can now market life insurance to their customers by referring them to SBLI's phone sales line or through licensed bank employees in their branches.
R. Michael Hedden, the vice president, insurance services at the association, said the member banks' customers are the "underserved middle market" that needs better access to term life insurance.
A consortium of 56 association members owns a group of insurance agencies already, but Mr. Hedden noted that most of the agencies focus on property/casualty insurance. Though the agencies all sell some life insurance, the association wanted to develop a large-scale relationship that would let all its members sell the same program.
Woburn, Mass.-based SBLI "has a track record of working with community banks and, prior to that, savings banks, and they've been successful at it," Mr. Hedden said. "They just kind of understand what it's like to sell through a bank."
SBLI president and chief executive officer Robert K. Sheridan said his company got its license to do business in Virginia in early 2002. The company already offered life insurance through nearly 200 financial institutions in New England - and by phone to people in the six New England states and Pennsylvania.
In addition, SBLI recently began offering its products to New Jersey residents through the New Jersey League of Community Bankers and its members.
Mr. Sheridan said SBLI's success in selling through the association in New Jersey prompted it to try a similar tack in Virginia.
SBLI was "in competition with some very formidable national companies" to be the provider for the Virginia bankers group, he said, but his company's experience at selling through banks helped close the deal.
Savings bank life insurance - insurance sold through banks - was first conceived by Louis D. Brandeis, later a U.S. Supreme Court justice, as a way to provide easy access to low-cost life insurance.
The first SBLI company was established in Massachusetts in 1907, and several other states followed suit, allowing similar companies to form. "It's interesting; now it seems very radical, banking and insurance together, and we were there in 1907," Mr. Sheridan said.
Mr. Hedden said that six to eight member banks have contracted with SBLI and begun getting the program off the ground in their branches. It could take a bank from one to three months to get a program up and running, he said, depending on how much training and information are required. He predicted that there would be sales through the members' branches during this quarter.
Banks can earn referral fees, or commissions if they have life insurance licenses, Mr. Hedden said.
He said he expects most members of the insurance consortium to sign up to sell SBLI but is also optimistic that other association members will want to add the product.
Because SBLI Co. will handle most of the marketing and selling, Mr. Hedden said, "a bank can really put in a pretty comprehensive program, with good, low-cost insurance, without having to really do a whole lot."
