New York Savings Banks Jump on the Insurance Bandwagon
Gross, Laura, American Banker
NEW YORK -- Savings banks in New York State are starting to make money from selling life insurance.
In the past year, several of the state's thrifts, including the largest, have established insurance agencies and started selling life insurance.
Eight have joined a program sponsored by the state's Savings Bank Life Insurance Fund and Ban Ser Corp., an insurance agency owned by the state's mutuals. Under the program, the SBLI covers the first $30,000 of risk -- its legal maximum -- and the rest is underwritten by the American Life Insurance co. And other insurance carriers are being solicited.
Since beginning the program this January, the agencies of the eight thrifts have sold $5 million to $6 million worth of life insurance, according to Harold J. Daus, president of Ban Ser. Newest Entrant Is East New York
The latest thrift to sign up is East New York Savings Bank, a $1.1 billion-asset mutual. It said late last week that it is taking the first step toward financial services diversification with the opening of the East New York Agency Inc.
East New York joins Dime savings Bank of New York, Dollar Dry Dock Savings Bank, Williamsburgh Savings Bank, Roslyn Savings Bank, Southold Savings Banks, Eastchester Savings Bank, and Onondaga Savings Bank, which were already participating.
Gilbert H. Forst, executive vice president and secretary of the SBLI Fund, said 10 or 11 more savings banks are asking their employees to get licenses so they can join the program.
This is not the only plant afoot to help the state's thrifts sell life insurance. Goldome, the Buffalo-based savings institution that is the nation's sixth largest thrift, and Monroe Savings Bank, Rochester, both signed up last year with Comp-U-Plan, a Paramus, N.J., service firm offering a similar program but not relying on SBLI to cover the first $30,000 of risk. Comp-U-Plan currently offers the policies of seven underwriters.
Other thrifts here are going it alone, among them the nation's 10th largest thrift, Empire of America FSA, which is selling insurance through its Shelton Square Agency. This is one element of Empire's Moneyplex financial services booths, which also offer real estate services and securities brokerage.
According to Donald E. Winslow, vice president of Monroe, the savings banks has sold about 800 policies for a face value of $28.3 million since beginning in early 1983. Like other thrift executives questioned, Mr. Winslow is reluctant to detail the agency's commission revenues, but he did say that MSB Associates, the bank's insurance agency, receives commissions from underwriters based on a fairly regular schedule: 40% to 60% for new policies the first year and about 5% for renewals during the next nine years or so. Foresees $1 Million in Revenues
Goldome, another Comp-U-Plan thrift, projects it will build premium revenues of $1 million this year. Its program, starting in January, grew by 50% in February, a spokeswoman said, based only on a few small print ads, statement stuffers, and branch signage. Goldome is the state's largest seller of savings bank life insurance and continues to offer that product to its customers.
A rule of thum for figuring premium revenues, according Mr. …