In a new LIMRA study, 78 percent of banks and credit unions with established life insurance programs said growing life insurance sales is an important priority for their institution.
The 2016 Bank and Credit Union Life Insurance Study looked at best practices in the distribution of life insurance through financial institutions. Banks have been challenged in finding success with life insurance sales. LIMRA found banks gained early momentum in the wake of the Gramm-Leach-Bliley Act (1999-2000) and experienced increases post-financial crisis (2009-2010), but in both cases, sales fell back in subsequent years.
While many of the institutions in the survey indicated they are not satisfied with their current programs, nearly half believe they are gaining traction with insurance sales. Some institutions that have sold insurance for many years have periodically tried different models and distribution methods to more effectively reach their customers.
For example, a bank may have decided to eliminate a platform program and focus on sales through financial advisors. Or the institution may add a direct-to-consumer approach. Referral programs are also popular.
Currently, based on revenue to the bank, about half of life insurance sales through banks or credit unions are single-premium products. While they see single premium continue to thrive, 75 percent of the institutions also predict that recurring premium products will be a much larger part of sales going forward (see chart on next page).
The institutions in the study are generally optimistic about the future: 61 percent believe that consumers will look more to banks and credit unions for insurance. Half recognize that direct-to-consumer strategies such as Internet, mobile, etc. will be an important distribution method in the future.
A finding in the 2016 Insurance Barometer Study showing that 25 percent of consumers are willing to buy life insurance from banks also supports bank and credit union optimism. Millennials and Gen X consumers are more likely (both 30 percent) than other age groups to do so.