1. finance
2. personal finance
3. insurance

The ABIA Best Practices Panel will
begin in 10 minutes.
A Webex tutorial will begin at 1:55.
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Got Life?
Creating New Revenue Streams
From Life Insurance
Part 1: Why Life Insurance
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Panelists
Panel Chairs
•
Toby Haun Vice President / Product Group Manager , The Huntington Investment
Company
Tel: 614.480.5433
Email: [email protected]
•
Chris Funk National Director, Financial Institutions (FIM) Accounts, Great-West
Financial
Tel: 303.737.6729
Email: [email protected]
Guest Speaker
•
Carmen Effron, Principal, C F Effron Company, LLC
Tel: 203-226-2645
Email: [email protected]
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Primary Research
Bridging the Cultural Divide 2011
Regional bank (assets in excess of $10 Billion)
Community bank (assets up to $10 Billion)
Credit union
Commercial bank with branches in more than 15 states
Other
0.0%
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20.0%
40.0%
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
60.0%
80.0%
100.0%
Primary Research
Bridging the Cultural Divide 2011
Multiple channel insurance provider, including through
financial institutions
Dedicated to the sale of insurance to client base of the
financial institution
Work with both Financial Institutions and Credit Unions
Work exclusively with credit unions
0.0%
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20.0%
40.0%
60.0%
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
80.0%
100.0%
Primary Research
Massachusetts Bankers Association 2012
32%
28.8%
51.7%
19.5%
Deposits Under $2B
Deposits Over $4B
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Deposits Between $2B - $4B
Consumer Life Insurance Needs
LIMRA 2013 Insurance Barometer
45%
43%
36% 35%
33%
32%
29%
25%
23%
17%
Yes
No
Total
<25 25-44 45-64 65+
<$50K $50K - $100K+
$99.9K
Age
Income
Total
Own Life Insurance
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Married /Partners Life Insurance Needs
LIMRA 2013 Insurance Barometer
63%
38%
31%
38%
32%
26%
31%
28%
25%
13%
1
Yes
No
<25* 25-44 45-64 65+
<$50K $50K - $100K+
$99.9K
Age
Income
Total
Spouse Employed
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Purchase Points
LIMRA 2013 Insurance Barometer
17%
11%
7%
5%
3%
1%
Warehouse club stores
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Superstores
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Drug stores
Supermarkets
Convenience sotres
Retail Outlets (Total)
Banks Retail Checking Revenue
5%
4%
18%
53%
19%
Overdraft Fees
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New Interest Income
Debit Interchange
Transaction Fees
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Maintenance Fees
Need for Non-Interest Fee Income
2.0%
21.5%
76.5%
Stayed the same
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Increased
Decreased
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Bank Life Insurance Revenue
BISRA Life Report 2012
2002
2003
2004
2005
2006
Single Premium
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2007
2008
2009
First-Year Recurring Premium
2010
2011
2012
Client Opportunity
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Less than 1-5%
1%
6-10%
11-25% 26-35% 36-50% Greater
than 50%
Investments
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Insurance
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Cross-Selling Expected
Affinion & Synergistics, June 2010
Rewards-Points Programs
Savings-Deposit Accounts
Investment Services
Identity Theft Protection
Somewhat
Very
CD's
Enhanced Checking
Annuity
Credit Protection Insurance
0
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5
10
15
20
25
30
35
40
45
50
Increase Net Interest Income
Strong loyalty;
91%, 66% stay due to insurance
·Deposit account is very likely; stays 4.5 years
·$6 Billion Asset Bank; $2Billion Retail Deposits
·$1.3B Core Deposits
·Proxy = Average Yield of 5 Year CMT
·Management Goes out Longer on Yield Curve
·1% increase in deposits = 3 BPs increase in NII
·$600,000/yr; $2.7 MM in 4.5 yrs.
Making More on the Core
Increase of NII of $269 MM or 1%
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Opportunity Cost
We found that NOT selling insurance products costs the average
Financial Institution in the Survey, $69 per account per year if
fixed and variable annuities are included.
This represents 28% of the average institutions' costs
of maintaining a deposit account.
28%
$250
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Profit by Number of Households
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Less than
1-5%
6-10%
11-25%
26-35%
36-50%
Greater
1%
than 50%
Less than 25,000
25,000 - 100,000
Over 100,000
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Why Not?
Insufficient profit margins
Not a "fit" with financial institution culture
Capital or cost/benefit concerns
Regulatory or statutory limitations
Training concerns
Comfort with sales process
Not comfortable with stock & bonds
Not comfortable with mutual funds
Not comfortable with commission pricing
Lack of information
0.0
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1.0
2.0
Copyright © 2013 C F Effron Company, LLC. All rights reserved.
3.0
4.0
5.0
Results of Research
• The tenure of insurance-buying depositors is
significantly greater than the average depositor.
• There is a significant opportunity to upsize your
relationship with a buyer of insurance programs.
• Insurance can increase non-interest fee income but
also NET interest income.
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Copyright © 2013 C F Effron Company, LLC. All rights reserved.
Results of Research
• Insurance can be a significant factor in maintaining
your relationship with depositors by reducing
voluntary attrition.
• The buyer of insurance has a strong expectation of
cross-selling, and a propensity to respond favorably
to those offers.
• The buyer of insurance indicates a likelihood to buy
multiple additional services, if presented with the
opportunity to consider.
• The cost/benefit of starting a program can be quantified
and programmed BEFORE you begin the process.
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Life Insurance & Financial Institutions
The Size & Scope of the Opportunity to serve
– Financial Services Providers have focused on the
affluent (6-15%) of population
– Mass Market in underserved or simply not served
(80-94% of the population)
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Life Insurance & Financial Institutions
The Need for Education
– Where does life insurance fit in the Financial
Institution?
– Platform, Financial Advisor, & Wealth Management
customers need planning help, different solutions
– Education of Financial Institution’s customers
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Life Insurance & Financial Institutions
The Need for Help
– Financial Institutions do not want to jeopardize
customer relationships
– Life Insurance can generate new revenues for
Financial Institution
– How to serve wide variety of Financial Institution’s
customers efficiently
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Life Insurance & Financial Institutions
Solutions for Financial Institutions
– Buy, Build or Rent?
– Direct Product Partnerships, Third Party Marketers
(TPM’s), Combination
– Building the solution: Products, People, & Process
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Building a Platform to Support Insurance Sales
Insurance Covers 2 of 5 Financial Tenets
• Banking
• Growth/Accumulation
• Income/ Distribution Planning
• Asset Protection
• Asset Transfer
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Building a Platform to Support Insurance Sales
Success is Driven by 4 Factors
1. Support Infrastructure
•
Does your back office function understand the differences between
“traditional” BD products and Insurance?
•
Are you willing to invest in dedicated resources to own the presale
and post sale support?
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Building a Platform to Support Insurance Sales
Success is Driven by 4 Factors
2. Product Training & Positioning
• Begin with Simplified Issue Wealth Transfer
• Essential to building confidence
• Emotionally Driven Conversation
• Uncomfortable Subject
• Overcome “Insurance Salesman” Mentality
• Longer Process and May Require Third Party
• Not Transaction Based
• May involve underwriting and home visit
• Practice, Practice, Practice
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Building a Platform to Support Insurance Sales
Success is Driven by 4 Factors
3. Accountability from the Top
• Separate Goals
• Grid Alignment between Advisors and Sales Management
• Bank Involvement: Clients for Life, Generational Succession
Planning
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Building a Platform to Support Insurance Sales
Success is Driven by 4 Factors
4. Recognition
• Celebrate the Successes Daily, Monthly, Quarterly, Annually
• Measure Cross-Sell
• Mentor Program
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Life Insurance & Financial Institutions
• Financial Institution Distribution Models:
– Branch Platform Model
– Financial Advisor Model
– Private Client/Wealth Management Model
• Choices &Help for Financial Institutions:
– Direct partnerships with product providers
– Partnerships with Third Party Marketers (TPM’s)- products, administration, point
of sale support
– Hybrid/Combination Models: Leverage best of direct partnerships and TPM’s
• Financial Institution Attributes of Successful Programs:
–
–
–
–
Banking, Insurance (Protection), & Investments are core priorities
Defined Process for Fact Finding & Profiling Customers
Balance of transaction based activities & identification of investable assets
Engagement of platform bankers and financial advisors: Teamwork, coach,
mentor, licensed, write, refer
– Goals: Accountability, Management , Measurement , & Recognition/Reward
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Questions and Answers
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THANK YOU
Register Now!
ABIA Annual Conference
September 16-18, 2013
Sawgrass Marriott, FL
aba.com/ABIAAC
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