Magazine article American Banker

Survey Concludes Banks Should Aim for Middle Market in Insurance Sales

Magazine article American Banker

Survey Concludes Banks Should Aim for Middle Market in Insurance Sales

Article excerpt

CHICAGO -- Banks should forget the rich and aim for the middle market when it comes to selling property and liability insurance.

That is the provocative conclusion of a new study of how consumers feel about buying insurance from banks and savings and loans.

The survey -- by Mathematica Information Services of Princeton, N.J. -- also found that auto insurance seems to have greater profit potential for the banking industry than homeowners insurance.

Based on current demand, as gleaned from a sampling of 5,000 households across the nation, the banking industry could garner $344 million a year in commission revenue from car insurance and $121 million from the sale of homeowners insurance without special promotions and advertising.

However, the potential revenue in homeowners insurance would not support the entry of a large portion of the banking industry, the study concluded.

"The household market will require cultivation, with marketing, promotion, and pricing, in order to make it large enough to support large numbers of banks and thrifts," the study said.

And Dr. Kenneth Kehrer, the firm's director, warned that before banks jump into selling car insurance, they should consider one negative factor: the impact on their reputations from those who are dissatisfied with settlements of their claims. Current claims procedures "leave some individuals mad," and there is a chance this anger would be directed towards the bank rather than the insurance company, he said. Consumer Interest

Myles Maxfield, senior economist with Mathematica and director of the study, concluded that "there is already a basic consumer interest in buying insurance from banks and thrifts. These market projections should be viewed as the floor upon which additional demand could be generated with effective marketing and pricing strategies. …

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