Insurance Sales: Old Hat for Northeast Thrifts

By Corman, Linda | American Banker, June 5, 1991 | Go to article overview

Insurance Sales: Old Hat for Northeast Thrifts


Corman, Linda, American Banker


Insurance Sales: Old Hat for Northeast Thrifts

Should Congress allow banks to sell insurance? That question is hotly debated in Washington these days, but it probably seems like a tempest in a teapot to savings banks in three northeastern states that have been selling life insurance for decades.

Taken together, savings banks in Connecticut, Massachusetts, and New York have $32 billion of policies in force, enough to rank among the nation's 50 largest life insurance companies.

And the business is growing apace. Over the past five years, the value of savings bank life insurance in force has doubled, largely because the states have increased the amount of insurance that a bank can issue to any one individual. In Massachusetts, for example, individuals can now get $250,000 of SBLI coverage, up from $62,000 just four years ago.

"Immediately, our issuance tripled," said Francis D. Pizzella of the Massachusetts SBLI Council, which administers the state's savings bank life insurance program.

Another factor driving the growth of SBLI: It is relatively inexpensive, given that the SBLI Council and its counterparts in Connecticut and New York limit the profits that member thrifts can earn on the business.

Alternative to Capitalism

After all, SBLI is not a creature of capitalism but of state governments that wanted working people to have access to basic, low-cost life insurance. With the strong support of former Supreme Court Justice Louis D. Brandeis, Massachusetts' SBLI program came into existence in 1907, following several insurance scandals. Thirty years later, New York and Connecticut initiated their own SBLI systems.

A.M. Best's Cost Analysis

Savings banks decline to give comparative costs. But A.M. Best Co., the Oldwick, N.J.-based firm that tracks the insurance industry, indicates that SBLI can be far less expensive than traditional insurance.

For example, the median premium for the first year of a $250,000 term policy sold to a 35-year-old, nonsmoking male by 75 major insurance companies nationwide was $300.44, according to A.M. Best data. A comparable SBLI policy sold in Massachusetts would cost $225, a 25% savings over the median.

Savings would be even more dramatic over time. By the 10th year, the same policyholder would have paid $3,050 in Massachusetts versus $4,369.61 for a median-price policy -- a 30% savings. In New York, comparable figures for SBLI are $180 in the first year and $3,232.5 in the 10th year, savings of 40% and 26% respectively.

|It's a Good Package'

What's in it for the thrifts? So far, SBLI has been little more than a way to build customer loyalty.

"It's a good package to offer consumers," says William P. Morrissey, executive vice president of the Boston Five Cents Savings Bank, a major SBLI policy writer in Massachusetts. "It gives us a little advantage over commercial banks. It's one-stop shopping."

"It's an attractive means of building customer relationships," agrees Daniel Keppel, insurance administration manager for the Dime Savings Bank, one of the largest writers of SBLI in New York state.

But that could change in Massachusetts under proposed rule revisions that would allow savings banks to charge fees and make profits on SBLI. Last year, following a five-year struggle, the state passed a law allowing the Massachusetts Savings Bank Life Insurance Council to become a corporation. The banks, which will be sole shareholders in the corporation, may receive dividends and banks selling policies will be able to collect fees.

If, as appears likely, the Massachusetts insurance commissioner signs off on a plan putting the new system into effect, as of Jan. 1 the new company will supplant both the council and the individual SBLI departments in the 53 Massachusetts banks that currently sell policies. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Insurance Sales: Old Hat for Northeast Thrifts
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.