Selling Insurance In Banks: Its More Than Referrals
I frequently have conversations with both insurance company executives looking to distribute life insurance through banks as well as producers evaluating the prospect of becoming an insurance specialist inside a financial institution. In most cases, the burning question in their minds is, “How do you get bankers to refer their customers to you for insurance?”
My answer is always the same: We dont. Rather, we prefer to help the bankers bring insurance to their customers.
Clearly, bank customers, with their affinity to the institution, are valuable. But the potential value of a prospect, whether an individual or a commercial account, is greatly enhanced if the skills, personal relationship and financial expertise of the banker is effectively leveraged.
Regardless of what the stereotypes might suggest, most bankers are good salespeople with an impressive approach toward building long-term relationships.
This is especially true among commercial bankers–that is, those who work with business clients as opposed to individual consumers. However, retail branches were the first to demonstrate success in insurance product integration, by selling annuities through investment representatives and licensed bank employees. While life insurance is arguably more difficult to sell from a bank lobby than annuities, there is still great potential for retail bankers also to be a successful sales platform for term life and long term care insurance products.
The most significant yet most overlooked opportunity for insurance sales in banks resides within the commercial sales division. With appropriate consideration given to commercial bankers inherent skills, sales expertise and massive relationship base, the opportunity to leverage this sales force for business, estate and employee benefit insurance activities is staggering. In fact, at UMB we have begun to license many of our commercial bankers so that they have the ability to discuss insurance with their business clients. And while the complexity of some insurance products hinders a licensed commercial bankers ability to close sales without the help of an experienced insurance professional, he or she plays an integral role in the process.
I like to refer to commercial bankers as sort of perpetually new agents. When most of us entered the life insurance sales profession, we started by learning what we needed to pass the state insurance exam. Further training followed on how the products worked and why our prospects might need them. Initially, our goal was to know enough to approach our personal network of family, friends and contacts to secure an appointment to discuss a particular product or concept. At that point, our sales manager would actually conduct the sales presentation and close the sale. Subsequently, the agent had the opportunity to continue to manage the ongoing post-sale relationship.
If you substitute “agent” with “commercial banker,” “sales manager” with an “insurance professional” and “personal network” with “commercial customers,” you essentially have the sales delivery strategy we use.
There is an array of business and corporate culture issues that make delivering insurance within a bank unique. To achieve an approach that successfully integrates insurance into the banks sales channels while being mindful of those business and cultural issues, I recommend a program that incorporates three objectives:
1. Use your dedicated insurance expertise wisely. UMB thinks of its product delivery model in terms of three types of sales processes: direct, platform and dedicated. The processes differ in complexity and in the level of competence required to support an insurance transaction.
The direct process involves mass marketing without the need for a dedicated insurance professional during fulfillment. For example, this could be done through direct response or advertisements and supported by a call center.
The platform process relies more on the relationships bankers have with customers. In this team approach, a retail or a commercial banker is supported by an insurance professional to assist in meeting customers insurance needs.
Finally, within the dedicated process, insurance makes up one or more aspects of a sophisticated overall estate or retirement plan. This occurs when a trust or investment professional works closely with an experienced insurance professional to create a complex, highly customized plan that incorporates insurance solutions.
This direct method of sales requires little time and expertise, yet the success of platform and dedicated sales processes rests heavily upon the banks ability to match the right skills and expertise with the various banking channel needs.
2. Develop an attractive incentive plan for licensed bankers and investment representatives.
Some firms provide referral fees when a customer introduction is made to an insurance professional. That approach may work fine, particularly for some of the transactional areas within a bank. But my personal opinion is that if you want insurance to become a core product of the bank, you have to recruit the institutions best talent to sell insurance in-house.
I am further convinced that if you want a banker to commit to the level of activity and professional development required to build a successful program, you need to be prepared to pay them for their contribution.
3. Include seasoned legal and compliance professionals on your agency management team. Your sales depend on it.
In an integrated bank insurance program, solid legal and compliance guidance is an essential part of making the sales engine run. Bank agencies have an additional level of regulations to deal with than their nonbank counterparts. In addition, the financial institution itself will likely have its own web of policies, procedures and oversight committees. These must be navigated to assure your sales strategy not only survives the test of time but also runs parallel with the culture and reputation of the institution.
There is still a long road ahead to the success of bank insurance programs in the country. However, as with any business, success will ultimately be achieved because of the banks people.
is president of UMB Scout Insurance Services Inc., a subsidiary of UMB Bank, Kansas City, Mo. He can be reached at Troy.Bender@umb.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 17, 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.