Banks increased their insurance brokerage fee income to a record $4.08 billion in 2006, up 3.7% from $3.93 billion the year before, according to the 2007 Michael White-Symetra Bank Fee Income Report.
The report, by Michael White Associates LLC, Radnor, Pa., measures the banking industry’s production of fees from sales of insurance, investments, and mutual funds and annuities. It is based on data reported by all 7,837 commercial and FDIC-regulated savings banks in the United States, of which around 47% generated insurance brokerage revenue, according to MWA.
At the top of MWA’s list of banks in insurance brokerage fee income was Citibank N.A., New York, which reported brokerage fee income of $973 million for the year ending Dec. 31, 2006. Branch Banking and Trust Company Raleigh, N.C., which has acquired more insurance agencies than any other bank, ranked second, with $799.4 million in insurance brokerage earnings. FIA Card Services N.A, Wilmington, Del., formerly MBNA America Bank N.A., ranked third with $256 million.
Those same 3 banks also led the MWA list in 2005.
Bank insurance brokerage fee income consists of commissions and fees earned by a bank or its subsidiaries from insurance product sales and referrals of credit, life, health, property, casualty and title insurance as well as annuities not sold by securities brokerage firms.
Because of the way the data on bank sales of insurance and financial products is reported by the Federal Reserve Bank, which compiles the data, it is not possible to break out the data for most individual products. [Bank brokerage income from mutual funds and annuities is reported separately, however.]
Banks with over $10 billion in assets continued to have the highest participation rate in sales of insurance and related products, with 71% reporting insurance brokerage activities producing a total of $3.2 billion in fee income. These largest banks accounted for 78.5% of all insurance brokerage fee income earned by banks last year, according to MWA.
Michael White, president of MWA, notes the industry’s growth rate declined last year from a compound annual growth rate of 6.5% since 2001. In 2005 alone, the industry recorded 8.4% growth.