NU Online News Service, Mar. 7, 3:03 p.m. – A new project to study sales of insurance through banks was spearheaded by a group of life insurance companies eager to assess growth prospects in the bank channel, officials involved in the project say.
Many of the 426 members of the American Council of Life Insurers, Washington, have pushed the trade group hard over the past year to look at the bank channel, says Chris Orestis, ACLI’s senior vice president for membership and development. “They wanted us to be more actively involved in it”, he says.
Orestis declined to identify which life carriers were in the forefront of the new initiative. His group’s advisory council includes such names as Nationwide Financial, New York Life, Aegon/Transamerica, Swiss Re and GE Financial..
Insurers are not yet clear on what the study should encompasses, Orestis says, but ACLI’s immediate goal is to predict the scope and shape of the bank-insurance industry in the next three to five years. To that end, it has commissioned the Washington law firm of Baker & Daniels to undertake an extensive study of the legal, economic and operational issues that are changing the industry.
Charles Richardson, chair of Baker & Daniels’ insurance and financial services team, expects his firm to make a preliminary report to ACLI in about a year based on input from executives in both the bank and insurance industries. ACLI retained his company to do the study because of its history of involvement in bank-insurance transactions, particularly in reinsurance.
“It’s going to be a double-vision examination,” Richardson says. “We’re going to look at how insurers perceive banks and vice-versa. Our working title is, ?Bank Insurance: Threat or Opportunity?”‘”
That also happens to be the title of an ACLI symposium that was held today in Washington, at which Richardson formally announced the new research initiative.
Baker & Daniels will do much of its research in focus groups and interviews of executives during ACLI’s annual conference in San Diego, to be held from Oct. 13 to 15, Richardson says.
Orestis adds that research on bank insurance is sorely needed in the post-Gramm Leach Bliley Act era, referring to the 1999 law that enables banks, insurers and other financial services to enter one another’s business.
“The marketplace is changing rapidly, so research like this is crucial,” he says.
“There are close to 5,000 banks selling some kind of insurance, and they are all going to need product,” observes Carmen Effron, a Westport, Conn., consultant who is working with Richardson on the project. “They need a forum to talk about the opportunities.”
Banks and insurers have a long way to go in developing both products and processes for selling them, she says. “We’re just beginning to learn each other’s businesses.”