A Better Fit Needed For Life Sales In Banks

“People often look to Europe for success with bancassurance,” he says. “Because the bank and insurer are often both parts of conglomerate there, you wind up with banks selling only one insurance company. Having fewer partners just simplifies things so greatly, and I think thats overlooked.”

Sell the agent. One of things middle market consumers are wary about is the banks expertise, Grzywacz says. “In addition to advertising and plugging the availability of life insurance, the bank needs to market the agent,” he adds.

Automate the process. Another barrier is the length of time it takes to get an insurance policy approved. Bank customers are likely to be familiar with annuities and mutual funds, which require no waiting, observers point out. Buying life insurance, which may take weeks to process, is not something they get used to quickly.

“The bank has to concentrate on simplifying the cumbersome paper process,” says Starr, who believes technology is coming to the rescue with solutions that werent available even a year ago. New software and online platforms promise to automate, streamline or eliminate paperwork and put control of application tracking in the hands of bank advisors, he says.

These applications let the advisor fill out an application on screen, send it straight to underwriting, and use artificial intelligence to help screen the applicant and to eliminate submissions that are unlikely to be accepted.

Vacca, whose firm provides its bank clients with a system for processing life applications online, predicts such technologies will encourage bank sales managers and reps to sell more life insurance by making it easier to do so.

He claims that an automated system like CoreLINKs can be 90% accurate in predicting whether an applicant will qualify for a life policy. So, needless applications are reduced, while those submitted are likely to be processed quickly.

Underwriters say half of business they get from bank reps is incomplete, Vacca says. When advisors leave something off an application or check the wrong box, they have to go back to the customer and get an amendment signed. Such delays often kill the sale.

“Our goal is to have fully underwritten products written in as little as 15 days instead of as much as 8 weeks,” says Vacca. “Reps dont want to sell if it takes 90 to 100 days, and then they find out it was declined. Insurance companies dont want to take it that long, either, because it increases the number of not-takens. By shortening underwriting, the number of taken policies goes up significantly. Its a matter of having complete, accurate information.”

Using CoreLINKs system, for instance, one insurer can approve a $250,000 term life policy within 15 minutes right in the bank, Vacca says. Costlier or more complex life products may take only 4 or 5 days to approve because of the efficiencies available through online automation.

Automation also assures that applications are complete and error-free. And it helps satisfy compliance needs. CoreLINKs system leads the advisor step by step through all forms, including state-mandated suitability disclosures required for a given customer.

Perhaps the biggest advantage of an automated system is its ability to provide real-time tracking of business, Vacca says.

“A lot of bank sales managers dont encourage reps to sell life insurance because the sale takes so long, and they never know its status,” says Vacca. “They get a daily report on sales of mutual funds and annuities, but on insurance sales, they are lucky to see it monthly.”

LIMRAs Grzywacz thinks banks should focus on selling insurance to younger, less affluent consumers in the hopes of retaining their business as they mature.

“Banks are good at segmenting their markets,” he says. “They ought to take advantage of the work they do to hone in on younger consumers.”

One tactic that might pay off: free financial planning. Grzywacz sees this as more of a service, not a sale, but one that could lead to more sales of financial products, including life insurance. Financial planning software is readily available that would allow bank advisors to develop a usable plan in a short time for a customer, he notes.

Mid-market consumers told LIMRA theyd be more comfortable buying life insurance from an agent than a bank. Getting them to see things differently requires action by both banks and carriers, Grzywacz says.

Reproduced from National Underwriter Edition, March 17, 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.