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October 16, 2003 at 08:00 PM
New Survey Quantifies Cultural Divide Between Banks And Insurers
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The perception of insurers is that banks lack of senior management support, commitment to production goals and access to the banks client base inhibit the successful sale of life insurance through banks, a new study conducted for the American Council of Life Insurers, Washington, finds.
The study attempts to quantify the philosophical or cultural differences between the two types of financial institutions. Recognizing these differences is a necessary prelude to identifying and understanding ways to bridge the cultural divide that may be inhibiting insurance sales through banks.
How do you measure the perceptions of life insurers and banks? And how much do the differing perceptions prevent the two institutions from working effectively together to sell life insurance?
The ACLI study, recently completed by the author with strategic partners KPMG LLP and Baker & Daniels, Indianapolis, explores these and many other issues.
The study is the first in- depth look at the cultural differences between the two industries in a statistical meaningful way by employing gap-analysis techniques. Essentially the same questionnaire was given to the banks and life insurers, allowing us to make ready comparisons between the bank and insurance company responses.
Banks and insurance company senior executives from around the country scored each of 25 core questions. Each question was comprised of a number of individual elements that were rated on a one-to-10 scale, where 10 represented the best score. The questions were designed around six subjects: distribution, marketing and sales, product design, risk and profitability, administration and operations, and effectiveness.
Typical of the findings are those illustrated in the accompanying table, which displays results for the administration and operations parts of a question. The question first asked was how the respondent would characterize 17 elements in optimizing a bank/insurer relationship. Then it asks the respondent to rate his or her satisfaction with the implementation.
The results on each of those facets of the questions ranged from high importance and high satisfaction to relatively low importance and low satisfaction.
Depending on results, these responses highlight areas where banks or insurers may have invested too many, not enough or about the right amount of attention and resources.
As the table shows, the element, “having products integrated into the banks procedures at the point of sale,” has the largest gap between banks and insurers. Therefore, this area presents a significant opportunity for improvement.
Although insurers ranked this area closely in both importance and satisfaction, banks satisfaction score on product integration was very low at 4.6, creating a significant gap of 2.9 between the importance and satisfaction score of the bank. There was also a gap of 1.4 in satisfaction levels on this point between banks and insurers.
Although insurers seem to be making progress on developing transaction-oriented, simple underwritten products for sale through platform and investment representatives, the study found, there is still a need to integrate products and processes at the point of sale. This is especially true in reaching the underserved middle-tier and emerging-affluent customers in the banks retail base. (These are defined in the study to be individuals with net worth of $100,000 to $500,000.)
