Bank Life Sales Continue Historic Surge in Fourth Quarter 2009

Windsor, CT March 18, 2010  —  After years of decline, bank life sales exploded in 2009 according to the quarterly Kehrer-LIMRA Bank Life Report. There was twice as much individual life insurance premium sold through banks in the fourth quarter of 2009 as there was during the same period of 2008. The fourth quarter represented the third consecutive quarter of very significant growth in the bank channel. In the first quarter of ’09 there was $190 million of life insurance sales through banks. In the second quarter of ’09 the number jumped 72 percent to $326 million. Third quarter – $359 million. Fourth quarter – $380 million.

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Overall, bank life sales increased by nearly 50 percent for the year, and 100 percent in the fourth quarter compared to the same quarter the previous year. Of all the distribution channels in the industry, banks experienced the largest increase in total life premium sales in 2009, both in terms of growth and absolute dollars.

“This is some of the strongest back-to-back quarterly performance we’ve seen since we started tracking sales of life insurance through banks. It seems like the perfect storm for bank life sales is continuing.” said Scott Stathis, Managing Director for Kehrer-LIMRA. “The recent difficulty bank-based investment reps have had selling rate sensitive products has proven to be an opportunity for the sale of life insurance. This is a good thing for banks since life insurance is something that should be an active part of their sales portfolio. It is also a good thing for bank clients since it is typically a necessary component of their financial planning needs. Banks may finally be stepping up to accommodate the underserved middle market as it relates to life insurance” Stathis continued.

The majority of the increase continues to be in single premium universal life (UL) sales which represent three quarters of new life insurance premium sold through banks. UL premium sales in 2009 were 74 percent higher than they were in 2008, and fourth quarter sales more than doubled. Also, there were 120 percent more UL policies issued through banks in 2009 than in the previous year. While people are buying smaller UL policies through banks, many more people are using the channel as a way to purchase their life coverage.

Overall, single premium sales were 57 percent higher in 2009 than they were in 2008. On the other hand first-year recurring premium sales dropped 15 percent and experienced their third straight year of double digit declines. The drops in first year premium have lessened significantly however since 2008 and the earlier quarters of 2009. By the final quarter of 2009 there was only 1 percent less first-year recurring premium sold than there was during the same period of 2008. The majority of this potential recovery reflects UL which now represents the lion’s share of recurring premium sold through banks.

Kehrer-LIMRA is a provider of best-practices research, benchmarking, study groups and consulting to the bank brokerage industry. Additional information can be found at http://www. kehrerlimra.com.

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