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.
