Life Premiums Through Banks Rose 44% In 1st Half Of 2002
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Banks and thrifts sold new life premium of $314 million during the first six months of 2002, 44% better than the same period last year, according to the Kehrer Report survey of insurance company sales through banks. The six-month total was 2.5 times the level achieved in the first six months of 2000.
Banks continued to emphasize single-premium life products, increasing sales of these products by 55%, to $241 million. First-year premium in recurring or flexible premium products like term life, whole and universal life, and variable life and variable universal life was up, too, albeit only by 16%. This seems relatively modest, but it was really quite respectable, considering that bank sales of recurring-premium products had actually fallen in 2001 from the prior year. So the gains during the first half of this year represent a significant comeback.
Weighted premium. Life insurance industry statistics generally discount single-premium products, because historically they were much less profitable to insurance companies than recurring-premium products.
LIMRA International, Windsor, Conn., uses the weighted-premium method to report industry sales. Premium from single pay products are discounted 90% in LIMRA sales statistics.
Under the weighted-premium method, banks had just $96 million in life sales during the first half of 2002 ($71 million in new recurring premium plus 10% of $243 million of single premium). Weighted premium sold through banks was up 25% from the first six months last year and 81% greater than the same period two years ago.
Market share of weighted premium. Banks continue to increase their share of US industry life sales, our study found.
Bank market share of weighted premium reached 1.7% in the first six months of this year, up from 1.4% for the same period last year and 0.9% two years ago.
Although bank life sales are still small, they are growing rapidly, and bank market share is also increasing.