Commonwealth Bank could free up capital for higher-returning businesses by selling its insurance arm CommInsure, analysts say, as a growing number of banks retreat for the wealth management sector.

After reports CBA may be considering joining rivals National Australia Bank and ANZ Bank in selling part of its wealth business, bank watchers said there was not a convincing strategic reason for the bank to hold the assets.

CLSA analyst Brian Johnson said life insurance was a capital intensive business in which banks such as CBA had no clear competitive advantage. Their advantage was the ability to distribute such products to retail customers.

"They are natural distributors, but not natural owners," Mr Johnson said.

Mr Johnson estimated that CommInsure, CBA's funds manager Colonial First State Global Asset Management and its distribution business Colonial First State had tangible equity of about $2.7 billion.

The Australian Financial Review this week reported CBA had bankers from JP Morgan helping it assess a potential sale of the insurance business. A CBA spokeswoman said the bank did not comment on market speculation.

Omkar Joshi, portfolio manager at Regal Funds Management, said it would not be a surprise if CBA were trying to exit life insurance, given the high capital intensity and relatively low returns in the business.

Banks could distribute life insurance products customers without needing to tie up their capital in underwriting the policies, he said.

"It's probably important to have the distribution, but you don't need to manufacture it yourself," Mr Joshi said.

A key challenge for CBA could be whether it can get an attractive price for the business, as ANZ Bank and a range of others are seeking to sell life insurance businesses.

"There are so many sellers and not a heap of buyers, so pricing is probably the difficulty," Mr Joshi said.

CommInsure was investigated by the corporate watchdog after wrongly denying some claims, with findings handed down this year. While the watchdog said it had not broken the law, it said using out-of-date medical definitions "short of what the community reasonably expects, and can result in poor outcomes for consumers".

Head of banking research at Morningstar, David Ellis, said the problems caused by CommInsure in recent years may be another reason to sell the business.

"It's probably taken a lot of time dealing with those issues. Selling the business would probably be a good outcome from that perspective."

He played down the impact of any damage to the CommInsure brand on such a sale.

"If a new entity acquired it, there would probably be a brand name change, which then would go some way to neutralising any negative reputation that the brand has," he said. "It might have some impact but I don't think it would damage the prospects of a sale."