New Evidence Points To Balanced Growth In Bank Life Sales
Two new surveys suggest that banks are not only making substantial progress in growing their life insurance sales, but also that this growth is balanced in two important ways.
First, the increase in bank life insurance sales is coming more or less equally from improvements in sales penetration of their client base by individual banks and an increase in the number of banks selling life insurance.
And second, after a focus on sales of single premium life for the past few years, the growth in the most recent period is balanced between single-pay products and traditional recurring premium life insurance.
Based on analysis of data from the 2002/2003 Kehrer-LIMRA Bank Life Sales Study, the typical bank selling life insurance produced $1.39 in new life/health insurance revenue per bank customer household last year, a 22% improvement in household penetration over 2001. This performance is in stark contrast to U.S. industrywide life sales. According to LIMRA International, annualized life premium grew only 3% in 2002. (See charts on this page).
The Kehrer Report semi-annual survey of life insurance companies that market through banks found that new weighted life premium was up 34% in 2002 over 2001. Our new analysis of data provided by the banks themselves indicates that slightly more than half of this growth is coming from improvements in life penetration from banks already selling life insurance. The balance comes from an increase in the number of banks selling life and health insurance.
New life sales revenue was up 19% in the banks already selling such products, which is 55% of the overall increase in weighted premium. Since the weighted premium computation assigns weights to new recurring-premium and single-premium products that approximate the ratio of commissions for the two types of products10 to one–weighted premium and new life sales revenue are reasonable proxies for each other.
A second set of evidence comes from the survey of life insurance sales through banks for the first half of this year. Insurance companies report that banks sold an estimated $442 million in new life premium during the first half of 2003, up 43% from the first half of last year.