Changes Needed To Increase Insurance Sales By Banks: Study

Bank revenue from life insurance stood at an average of only $1.70 annually per bank-customer household, according to a study by LIMRA International released early last year. Thats a figure that disappoints both banks and insurers, industry experts note.

Michael D. White, a bank-insurance consultant in Radnor, Pa., says ACLIs study has some helpful suggestions but also offers some he believes would be difficult to implement. For instance, the study suggests partnerships of bankers and insurers to share the costs of sales and product training for bank producers. White thinks implementing that proposal might take some time.

“That probably wouldnt immediately impact life insurance sales,” he says. “Instead, banks have to go back to some basic blocking and tackling in developing sales support and trainingcovering stuff like making the offer, prospecting, learning how to ask questions, those kind of things.”

In the long run, White believes, the best sales training involves the salesman watching his boss or mentor in front of the client. “Thats the kind of sales support thats needed in banks.”

Andrew Singer, head of the Bank Insurance Marketing Group, Mamaroneck, N.Y., says ACLIs findings agree with his own firms recent studies that found banks think sales training is a leading barrier to increased insurance profits.

The underlying problem, Singer believes, is that life insurance typically has a longer sales cycle than bank brokers are used to. For that reason, it can be difficult to get investment sales specialists to focus on life insurance, he says.

“Most banks are still taking their existing sales force of dedicated brokers and laying insurance on them among other tasks,” Singer points out. “The big problem is its a much more difficult product to sell than mutual funds and annuities. Sometimes you have to meet with a client 2 or 3 times, and then you may not get approval from underwriting for another 2 or 3 weeks. So, the tendency among bank reps is not to bother.”

Aside from more education, Singer thinks banks need to do a better job of establishing life insurance sales goals for their Series 7 reps.

“Its the only way you get them off their fixation with transaction-type products,” he says.

Another consultant, Kenneth Kehrer, Princeton, N.J., argues that the study has to be considered against the backdrop of growing life insurance sales in banks.

“The fact is that bank sales are growing, and industry sales havent been,” he says. “Despite the problems banks have had selling insurance, they are gaining market share.”

Reproduced from National Underwriter Edition, January 6, 2005. Copyright 2005 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.