Banks, Insurers Are Happier Together

A new study finds life insurers and banks are working together more smoothly than 5 years ago but still believe they need to improve their product distribution efforts.

The 2008 study, “Bridging the Cultural Divide between Banks and Life Insurers,” is a follow-up to earlier studies of bank sales of life insurance by the American Council of Life Insurers and the American Bankers Insurance Association, both in Washington. As with the earlier studies, presented in 2003 and 2005, it was conducted by C F Effron Company LLC, Weston, Conn.

Insurers and bankers interviewed in the latest study agreed that availability of life insurance products suitable for the bank channel is no longer a problem. Both sides agreed, too, that they have identified important profit opportunities. In the 2005 study, both sides had cited product availability and profit as top concerns.

Bankers and insurance company executives still had concerns in the 2008 study, mostly involving the life insurance application process and finding ways to better use technology to increase sales, according to the study report.

The study found 67% of life insurance company executives and 63% of bank executives believe that consumers are more aware now than they were in 2003 that banks sell life insurance.

But life insurance executives wanted to see more support from bank senior managers for distribution of life insurance products, while bankers wanted to see better sales support from insurers for more complex cases.

Yet 71% of the banks and 80% of the insurers believed that insurance is not very important to banks’ non-interest fee income. The larger the bank, the less important insurance was to the bank’s non-interest fee income.

However, almost 50% of the banks believed that the distribution of insurance is equally as important as manufacturing and selling bank products, and 46% of the insurers agreed.