Bank Insurance Sales Rose In 2002, But Agency Acquisitions Were Down

Bank Insurance Sales Rose In 2002, But Agency Acquisitions Were Down

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Bank sales of insurance and investment products continued to hold their own in 2002 and even show respectable growth, analysts say.

However, another gauge of banks interest in insurance, agency acquisitions continued to decline. But even there, observers say, the industry may be seeing just a passing lull.

For the first six months of 2002, the most recent data available, banks sales of new life policies grew 44% over the same period in 2001, to $314 million, reports the Princeton, N.J., research firm, Kenneth Kehrer Associates. Bank sales of single-premium products grew 55% during that time, to $241 million, while recurring-premium life sales were up about 16%.

Liberty Life Assurance Company, a unit of Liberty Mutual Insurance Company, Boston, held its lead among life insurers in banks in the first half of 2002. Liberty increased its sales of new premiums to $58.2 million, from $45.4 million in the first half of 2001, Kehrer reports.

Allstate Corp., Northbrook, Ill., just edged out Aegon USA for second place, increasing its new-premium income in banks to $41.2 million, from $31.4 million. Aegon USA, a unit of Aegon N.V., The Hague, Netherlands, saw sales jump to $41.1 million, from $24.4 million.

Ranked by weighted premium, which gives extra importance to more profitable recurring-premium sales than to single-premium products, Nationwide Financial Services Inc., Columbus, Ohio, retained its lead in banks. However, its weighted premiums fell from $19.4 million in the first half of 2001 to $18.9 million in the same period this year.

Significant gains in weighted-premium sales in banks were made by Allstate, CGU and Aegon, all of which tied for sixth place in Kehrers rankings with $4.1 million in the first half of 2002. Allstates bank life premiums totaled $3.1 million the previous year, while CGU had $1.9 million and Aegon had $2.4 million.

Banks are learning to see life insurance not just as a profitable transaction but as a way to build a lifetime relationship with a customer, observes Cynthia Saccocia, senior analyst for the Tower Group, a Needham, Mass., consulting firm.

“Life insurance represents a longer sales process than what investment reps are used to, but it has value in building customer relationships,” she observes. “Insurance agents typically know a lot more about the customer than a broker does. The value that insurance can bring to bank brokers is in relationship sales and lifetime selling and retirement planning.”

Bank sales of investment products were mixed.

As of June, bank sales of variable annuities were up 34% over year-ago levels, Kehrer reports. Sales of fixed annuities were up 45%.