Among financial institutions that sell life insurance, almost 8 out of 10 program managers said lack of consumer awareness presents a key challenge to growing their sales.
The LIMRA-BISRA 2015 Bank Life Insurance Study looked at how financial institutions market and sell individual life insurance, the challenges faced, and the best practices of those institutions that are experiencing success.
“Awareness efforts by institutions are essential, but they represent only the first step to improving their life insurance sales,” said Patrick Leary, corporate vice president, Distribution Research for LIMRA. “Banks still struggle with overcoming the transactional mindset so prevalent in a bank environment and having their financial consultants and platform bankers embrace life insurance as a product offering. Banks with successful sales programs have put an emphasis on specific strategies to grow their business.”
Financial consultants and licensed platform bankers are used most often to sell life insurance for banks. Nine out of ten institutions distribute life insurance through financial consultants while licensed platform bankers are used by 58 percent of the banks.
In terms of what strategies are working, nearly all the top insurance programs have established a profiling process to gather data on their customers’ life insurance needs. Thirteen of the top 15 financial consultant insurance programs profile their clients as do 9 of the top 10 licensed banker programs.
Other winning strategies for institutions include making life insurance sales an organizational priority by linking sales results to overall compensation, bonus, and performance management. Setting life insurance specific-goals for sales professionals has also proven to be effective.
Currently, 96 percent of bank life insurance sales are single premium. As they look into the future, 42 percent of program managers predict recurring premium sales will see significant growth in their institutions.
Noting another trend, 40 percent of the program managers believe the middle market is an opportunity. On the future of distribution, bankers predict financial consultants and platform bankers will still handle most of the sales. Direct-to-consumer (D2C) methods however will grow and become central to an insurance sales strategy.
Only 7 percent of banks in the study leverage the Internet for sales today, but 71 percent indicate that the internet will be an important distribution method for their bank five years from now. Similar growth is anticipated for other D2C methods such as direct mail and outbound call centers.
“Banks already have a relationship with their customers, so an increased emphasis on life insurance and other financial product sales can make them a one-stop shop,” said Leary. “The study recommends an omnichannel approach by banks to meet the needs of different demographics while at the same time targeting those more likely to buy life insurance.”
Forty-five banks and credit unions participated in the LIMRA-BISRA study.