Banks are beginning to break away from the transaction mentality that limited their sales of life insurance for the past seven or eight years, industry experts say. The result is that life sales in banks, while still a small part of the business of both industries, are expected to show impressive increases.
“Life insurance through banks is what we consider a real growth opportunity,” says Bill Fife, vice president of the bank division of MetLife Investors, the independent distribution arm of MetLife Inc., New York.
Like a number of life insurers, MetLife has developed a specialized team to work just with banks–an external and internal wholesaling group along with an underwriting team and a marketing group.
Two years ago, MetLife’s bank wholesaling force had just two insiders and two outsiders, Fife says. Now, it has six external and nine internal wholesalers.
“When I joined Travelers [as it was then known, as part of Citigroup Inc.] in 2004, we had one bank,” Fife says. “Now, we have five and expect to continue to grow.” MetLife sales in the bank channel grew last year by 20% over the year before, he says.
The company seeks to do business only with members of the top 50 banks, he says. It also looks for banks with a successful track record with life insurance and a strong commitment to it, he says.
“The key is to go in and spend a lot of time in the front end of the bank. I look for the bank’s expectations and what it wants to accomplish with life insurance,” Fife says.
MetLife is emphasizing guaranteed universal life products in banks, including variable universal life, along with some term and specialized products, he adds.
“We also sell simplified issue, which we think is going to be the formula for success in banks.” Fife says. “There’s a whole cadre of customers who only do business with banks whenever they have financial needs. If we can provide a product that fits that need, they will buy it.”
Banks increasingly are recognizing life insurance as a critical financial product to deliver to the customer, according to Fife.
“I see them giving it a much stronger commitment,” he says. “What I’ve seen since I got into this business is an absolute determination they are going to be successful with this.”
John Gies, director of individual life for the Hartford Life Insurance Company’s financial institutions unit, says his company is looking for significant growth opportunities and sees banks as a big part of that growth. Sales increases for life in banks have been stronger than any other channel in the most recent four years, he reports.
“We’ve seen increases of 75% a year over the past four years, so clearly we see it as a growth market,” Gies says. “Our intention is to continue to ride the wave.”
Six years ago, when Hartford first got into selling life insurance through banks, there were few banks in the business. Now, nearly every bank is selling life insurance.
To be successful, a partnership between a bank and carrier has to be “broker centric,” Gies believes.
“You have to start with the same people who are selling annuities and mutual funds in banks–the dedicated investment rep,” he explains. “If they’re doing wealth management and financial planning, then life fits in nicely.”
It’s also important for banks to take full advantage of carrier resources, he says. Wholesalers in particular play an integral role because bank reps can call in the wholesaler to answer a customer’s questions and complete the sale.
Hartford’s target markets are banks’ emerging and mass affluent segments.
“That’s a nice client segment to focus on,” Gies says. “They already have mutual funds and annuities and so on through the bank. The reality is that as a bank, you need to be a full service provider. You can’t just help out with an annuity and not something else.”
Hartford has seen simplified issue in banks increase threefold in the last three years. “About 10% of the total premium volume we did last year was simplified process,” Gies says.
“We like to start them with single-premium UL, simplified and so on as training wheels,” he says. “Then we ask them to be a generalist, not a specialist. You can’t expect brokers to be life insurance experts.”
If bank brokers learn to be generalists, the bank’s relationship manager can bring in specialists from the carrier when needed, he says.
Hartford deals with more than 100 banks, Gies says, adding that both the carrier and the financial institution must agree to focus mutually on initiatives.
“My side needs wholesaler and key account resources to do a lot of short-term lifting for the bank, smooth out the paper flow, train people and provide infield time for the wholesalers. On the bank side, there must be top-down support.”
When looking at a potential bank partner, Hartford wants to see high visibility for life insurance. It also looks at how the bank recognizes its people, he adds.
“Are people at the bank allowed to qualify for recognition without life insurance? We like to see programs that provide incentives for life insurance while making it difficult for the rep to get recognition without life insurance.
He cites one bank in the Northeast that uses a quarterback-type rating system so a rep can’t be top ranked by performing well on only one goal, such as mutual fund sales.
“They need a balance on all business lines, even referrals to the banking franchise core,” Gies says. “They have to be hitting on all cylinders.”
Lastly, Hartford looks for a bank model that complements its model. Gies says his company has 70 wholesalers plus other salespeople available to banks, and it expects them to use them.
“A lot of banks say, ‘We don’t want your wholesalers; just give us products and contracts.’ But that’s not our game,” he says.
Prudential Insurance Company of America Inc., Newark, N.J., just began to create a bank distribution channel early last summer.
It has started with 12 superregionals–i.e., banks covering more than five states.
“We are starting by limiting our focus to community and regional banks,” says Joan H. Cleveland, senior vice president, business development for Prudential. “We have a strong broker general agent channel that already has relationships with larger banks, and we want smaller banks to have products available, as well, with a different product line.”
One thing banks want, Prudential quickly learned, is to make it easy to sell–and to buy–life insurance.
One problem with selling life insurance in banks is licensed platform bankers are bank employees to whom being a licensed agent is secondary.
“It’s easier for them to open up a CD than a life policy,” Cleveland says. “So, what’s imperative for us is to provide the bank with superlative training and work with its employees on how to sell.”
David Giertz, president of Nationwide Financial Institutions Distributors, a unit of Nationwide Insurance, Columbus, Ohio, says his company looks at the bank as its customer, “so everything we do is customized to bank strategy.”
Nationwide’s product mix in the bank channel is about 60% variable life and 40% fixed, mostly universal and whole life, Giertz says.
It sold $32.5 million of life insurance in banks last year, $19.8 million variable and $12.7 million fixed.
Banks represent about 20% of the company’s total life sales through nonaffiliated channels, including broker-dealers and wirehouses, CPAs and other specialists, Giertz reports.
Nationwide has been growing its bank-dedicated wholesaler force significantly, from eight a year ago to 25 currently.
Banks and their licensed employees crave simplified processes, Giertz says, so Nationwide makes it possible for licensed reps at the bank to go online and find out within moments where a customer’s life insurance application is.
“On top of that, we allow bank producers to call us and talk directly to our underwriters about specific situations,” Giertz says. “That’s rare in the industry.”
For more complex cases, Nationwide even provides CPAs and attorneys dedicated to support bank reps, who can talk to a customer’s own CPA and attorney about an advanced life product.
The company also has beefed up support for banks’ commercial lending units, which can provide access to small business owners. That opens profitable opportunities for sales of life insurance as part of business continuation planning, he says.
“We look for banks that understand the consumer and are willing to coach and train their reps to provide solutions to those customers,” Giertz says. “And life is just part of the overall solution.”