A new study finds life insurers and banks are working together more smoothly than 5 years ago but still believe they need to improve their product distribution efforts.

The 2008 study, “Bridging the Cultural Divide between Banks and Life Insurers,” is a follow-up to earlier studies of bank sales of life insurance by the American Council of Life Insurers and the American Bankers Insurance Association, both in Washington. As with the earlier studies, presented in 2003 and 2005, it was conducted by C F Effron Company LLC, Weston, Conn.

Insurers and bankers interviewed in the latest study agreed that availability of life insurance products suitable for the bank channel is no longer a problem. Both sides agreed, too, that they have identified important profit opportunities. In the 2005 study, both sides had cited product availability and profit as top concerns.

Bankers and insurance company executives still had concerns in the 2008 study, mostly involving the life insurance application process and finding ways to better use technology to increase sales, according to the study report.

The study found 67% of life insurance company executives and 63% of bank executives believe that consumers are more aware now than they were in 2003 that banks sell life insurance.

But life insurance executives wanted to see more support from bank senior managers for distribution of life insurance products, while bankers wanted to see better sales support from insurers for more complex cases.

Yet 71% of the banks and 80% of the insurers believed that insurance is not very important to banks’ non-interest fee income. The larger the bank, the less important insurance was to the bank’s non-interest fee income.

However, almost 50% of the banks believed that the distribution of insurance is equally as important as manufacturing and selling bank products, and 46% of the insurers agreed.

The study found 25% of banks and 31% of insurers sold less than $500,000 in total annual recurring life premiums in the bank channel during 2007. Also, 15% of insurers and 25% of bank respondents sold less than $500,000 in total annual single premium life premiums in banks during 2007.

There was an increase in respondents selling more than $3 million in life premiums. Effron reports that 35% of the banks and 38% of the insurers generated over $3 million of annual recurring life premium volume in 2007.

As in the earlier surveys, bankers also thought the life insurance application process still takes too long. Bankers also wanted to see more standardized products that target a broader consumer population so that they can be sold by their generalists, rather than specialists.

“The challenge is now to simplify the processes that are used to sell and underwrite policies for the mass middle income and emerging affluent clients of the bank,” said Carmen Effron, head of the firm conducting the studies.

Effron said a significant development in bank sales of life insurance is an apparent decline in administration and operations and in effectiveness.

Insurers rated their satisfaction with their administrative and operational attributes required for a favorable working relationship with banks significantly higher than did the banks, Effron found.

Respondents to the survey consisted of 6 of the top 10 banking institutions selling life insurance and 6 of the top 10 life insurers selling through banks.

The study was sponsored by Liberty Mutual Insurance Company, Boston; Prudential Financial Inc., Newark, N.J.; and Reinsurance Group of America, St. Louis.