Both banks and carriers seem to be in closer agreement about how life insurance should be sold in banks, a study by the American Council of Life Insurers concludes.
Since 2003, when ACLI first looked at banks’ insurance sales practices, life insurers have sharpened product training in financial institutions and cultivated high-level contacts with banks, according to consultant Carmen Effron, Weston, Conn., who wrote the study report.
“In the 2003 study, there was a huge gap in the amount of training banks were asking for and insurers were providing,” Effron says. “There was no big gap this year.”
On a five-point scale, both insurers and banks rated training at around 3 in importance in 2005, compared to 2003, where banks rated training at 2.7 and insurers rated it at 3.6.
The newer study found banks craving customer service and compliance training the most, while insurers emphasized product training the most, followed by customer service.
Effron says one of the key recommendations she would make as a result of the study findings was that banks train their representatives to engage in life-stage profiling of bank customers.
Under this approach, reps would sell financial products of all kinds, including insurance, to customers based on such factors as whether they are just starting a family or preparing for retirement.
The life-stage approach is simple for bank reps to grasp and put into practice, Effron explains. “If you are going to keep things simple for bank representatives, give them tools that make it easy to have this conversation with customers.”
Another notable finding of the study was a significant reduction in the past two years in the number of carriers banks use.
In 2003, 41% of banks worked with fewer than 10 insurance companies, vs. 55% in 2005, the study found.
Among insurers, 31% had one to five bank partners in 2005, although on the other extreme, 27% worked with over 50 banks.
“There seems to be growing awareness on the part of successful programs that they get better results with fewer partners rather than more,” observes Michael Lovendusky, ACLI senior counsel. “They find they can obtain greater focus and commitment by narrowing the number of partners.”
ACLI also found a notable change in the reasons banks and insurers want to do business with one another.
In 2003, for both sides, it was all about producing more fee income. This year, banks and insurers agreed the No. 1 reason to distribute life insurance was to build and retain customers. Tied for second place for both sides: providing one-stop shopping for financial services and producing fee income.
More than 66% of both sides agree most bank customers are either unaware or barely aware their bank sells insurance, ACLI found.