Agents Can Strike Gold By Selling Worksite Benefits Through Banks
Bank insurance programs currently are experiencing high activity due to banks need to find new ways to increase their revenues. From this highly charged environment, the next segment of the bank insurance market to emerge will be the small business and commercial customer. This customer provides banks a unique way to combine an entire array of property and casualty products and services with those from the life side to fashion a single enterprise solution.
There are about 25 million small businesses in the United States, representing 99% of all employers. They employ over 53% of the private work force, totaling over $1 trillion in payroll. These firms typically have 10 to 50 employees, are privately held or family owned, and represent up to $25 million in sales each.
The key point to remember is that while many of these firms do not have an insurance agent, all of them use a bank. What a prospecting gold mine for a broker or insurer working through banks.
A bank insurance agency can offer a single solution to the owners and employees of these 25 million small businesses via 3 different sales initiatives.
First, by using employee benefit programs (group and voluntary), an employer owner could customize a suite of products aimed at many of their noninsured and underinsured employees.
Second, the owner could offer benefit programs aimed at key personnel, boards of directors and, most importantly, themselves.
Third, these programs could be made more alluring by being tied to convenient bank products such as savings accounts, checking accounts and payroll deduction services.
Unlike one-on-one sales by platform salespeople to the banks customers, these small business-commercial sales present several challenges.
The first challenge is selling the new business development officer, bank branch manager or upscale bank personnel on the benefits of offering an insurance program to their customers.
The second challenge is convincing employer owners of businesses to buy into the program.
The third challenge is selling to the individual employees.
To illustrate the multiple sales opportunities, lets review the 3 tiers of this insurance sales pyramid.
The bottom tier illustrates voluntary benefits and worksite products that an employer can offer to employees. Each employee has an opportunity to buy individual products and pay for them conveniently through their employer and the bank. Among them are life insurance, long term care insurance, IRAs, and auto and homeowner insurance, along with bank products such as loans and mortgages. The cost to the employer is zero; the employee selects and pays for these benefits individually.
The middle tier illustrates the group employee benefitslife, health and retirementthat are a struggle for each employer owner. The perennial question for the owner is: What types of benefits to provide at what cost to the company?
The upper tier illustrates products and services targeted at the owners, key employees and board members. These products and services address the advanced sales concepts: buy-sell, deferred compensation and key person coverage.
A team approach is the best method to present an enterprise insurance solution to the small business customer. A typical team is composed of a banker, a property-casualty agent and a life insurance or employee benefits agent.
The banker sets the stage by introducing the concept to the small business customer. This banker can be the new business development officer, the branch manager or someone in the banks commercial area.
Once the clients needs are defined, the property-casualty agent provides access to both commercial coverages for the business itself and to individual home and auto products for employees.
The life insurance agent then packages a suite of products focused on the owner employer, key executives and employees, in general.
To support the sale and its administration, the bank can use its own Web page or Intranet to aid enrollment in the voluntary benefits program or to purchase individual insurance coverage. To further support the electronic sales, the agencys call center provides the personnel touch through further product information to the employees and ongoing service support to both the employees and the employer.
The end result to the bank is that these insurance offerings allow it to become a full financial services provider to its small business customers. This holistic approach ties these clients more closely to the bank, increases the banks assets under management and provides needed benefits to executives and employees of small businesses.
is president of Jordan & Jordan Associates, a consulting services company in Belchertown, Mass. You can reach her at [email protected]
Reproduced from National Underwriter Edition, November 24, 2004. Copyright 2004 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.