Banks Well Placed To Sell More Life Products, Says Hartford Exec
Despite recent flat premium growth, banks are in a good position to increase life insurance sales in the current economy, said Tom Marra, president and chief operating officer of Hartford Life Inc., in a speech here at the Bank Insurance and Securities Association annual convention last week.
Many life insurance carriers see banks as an opportunity to gain share of market as they invest in improving field sales support, Marra said.
Moreover, he maintained, with only 53% of Americans owning any kind of life insurance, the market is underserved and underpenetrated. Insurers need banks to help pierce that market, he said.
Although annuity sales have shown strong growth in banks, data compiled by LIMRA and Kenneth Kehrer Associates, Princeton, N.J., show industry sales of life insurance flat, holding steady at around $11.5 billion between 2000 and 2002, he noted.
“Many Americans are not being called on to buy life insurance,” Marra said.
With almost 14,000 series 7 financial advisors and 25,000 licensed platform bankers, banks have an opportunity to leverage their sales forces to sell a varied menu of financial products, he noted.
Hartfords bank sales for all products, including annuities and mutual funds, rose 12% to more than $4.6 billion in 2002, from around $4.1 billion the year before, he reported.
Marra also noted that banks are well situated to take advantage of the expected boom in retirement plan rollovers.
He pointed to data showing an increase in retirement rollovers from $212 billion in 2001 to an estimated $264 billion this year and $327 billion by 2006.
“Bank deposits are the biggest piece of it,” he noted.
“The first line of attack” into the retirement market for both banks and insurers will be through employer-sponsored plans, which will then open up an entr?e into increased sales of individual plans, he said.
Because of the growth in the retirement market, financial advice is becoming more and more important, Marra added. Turning again to studies by LIMRA, he pointed out that the vast majority of people prefer to get financial advice face-to-face with an advisor.
“Despite current headlines, there are big opportunities due to demographics, the value that people place on financial advice and the amount of money that is on the sidelines,” Marra said of the retirement market.
However, he added, insurers themselves are going to have to come up with product innovations to meet customers expectations.
For one thing, they are looking for products that allow them to get some exposure to the market without too much risk, he suggested. To meet that need, insurers will have to come up with new approaches to annuities.
“Immediate annuities are going to be an important part of the equation, but I think new products are needed. The rollover market will be big for immediate annuities,” he predicted.
Due to a sudden bout with the flu that prevented him from traveling, Marra addressed the meeting via teleconference from his companys home office in Hartford.
It was BISAs first convention since it was created last October in a merger of the Bank Securities Association and the Financial Institutions Insurance Association.
Reproduced from National Underwriter Edition, March 10, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.