Banks Competing For Advanced Life Sales
Banks are now getting some traction in their sales of life insurance. First-year life premium sold through banks was up 31% last year to $452 million.
What are banks doing differently? For years they have experimented with a wide range of distribution methods: direct response marketing (mail, phone and Internet); retail life insurance agents; investment sales staff (stockbrokers) focused on selling mutual funds and annuities; platform bankers; and advanced life agents, who cater to the estate planning and business succession needs of affluent customers and commercial clients
Of all these distribution methods, banks are now learning, advanced agents produce the most revenue. The annual Kehrer-LIMRA Bank Life Sales Benchmarking Study found that advanced agent sales forces generated $37,257 in commission revenue per billion dollars of bank assets in 2000, 55% more than the investment sales staff and twice the asset penetration of retail agents (see chart).
But selling to the advanced market puts banks squarely in competition with the most successful life insurance professionals. What are the keys to this market?
We have found the following attributes to be the best drivers to success.
Recruiting Top Agents. Selling to the advanced life market requires top life insurance sales professionals. Much of the mediocre sales performance in bank life insurance efforts in the past can be traced to recruiting agents who were not particularly successful in a career agency or in a personal producing general agent setting.
But banks have been challenged to recruit top agents, many of whom prefer to maintain their independence.
One approach is to joint venture with a life brokerage company that can provide top-level agents to work with banking staff. A life brokerage company may be better positioned than a bank to recruit top agents and to retain them through the learning curve years until they reach optimal performance.
Teaming With Bankers. It is crucial for the advanced agent to develop the confidence of gatekeepers of the banks commercial customers and trust and private banking clients. This confidence-building takes time. Even top agents struggle at first in a banking environment, as they win over the banks relationship managers one at a time.
According to the Kehrer-LIMRA Benchmarking Study, the average advanced agent produces only $53,778 in annual commission revenue during the first one-and-a-half years in a bank. Annual productivity almost doubles during the next two-and-a-half years and improves another two-thirds during the fifth year, before doubling again starting in year six (see chart).
Access to Products. The advanced life market requires a range of products and underwriters to craft the best life insurance solutions.
The advanced life market demands objectivity and creativity. To get the most favorable underwriting terms and top-tier compensation with the nations leading life carriers requires market clout, which is achieved through annual premium production and industry knowledge.