BANK INSURANCE: PERCEPTION v' REALITY

1
BANK INSURANCE PERCEPTION v. REALITY

• Michael Lovendusky, ACLI
• Charles Richardson, Baker Daniels
• Scott Harrison, KPMG LLP
• Carmen Effron, CF Effron Company LLC
• Betsy Cosgrove, Liberty Life Assurance
• Steve Knez, Citibank

2
The Bank Insurance Marketplace

• Premium Growth
• Types of Coverage

3
Insurance Products Currently Distributed by Banks
4
Insurance Products Currently Distributed by Banks
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Products That Sizzle - And Fizzle
Annuities ? Credit/Personal/PC
? Life/Disability/LTC ?
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  ABIA Studies

•  

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The Promise of the Gramm Leach Bliley Act

• 1999 Glass Steagall Walls Shattered
• Few Marriages Not Even Much Dating
• Why?

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The Data

• ABIA, Kehrer, White, Effron
• Heavy on Annuities
• NOT Life

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Why This Study Was Needed

• A Lack Of Data And Hard Evidence
• Unexplored/Hidden Obstacles
• Needed Specifics - Not Moogey/Foogey - From
  Both Sides
• Missed Opportunities And

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Groundwork For A New ACLI Initiative

• Start With Solid Financial Management Information
  
• Baseline For Future Study
• Foster Communications And Understanding
• Produce Recommendations And Action Items

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Objective

• Identify the primary drivers of successful
  insurance sales programs
• Evaluate satisfaction levels with insurance sales
  programs on key attributes
• Identify relationship weaknesses in
  bank/insurance company sales partnerships
• Identify cultural/perceptual differences between
  banks and insurance companies

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Methodology

• Study conducted by CF Effron Co. LLC in
  partnership with KPMG and Baker Daniel on behalf
  of American Council of Life Insurers
• Targeted senior executives of banks and insurance
  companies throughout the country
• 76 responses constitute a representative sample
  of the universe of the two target groups

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Methodology

• Study measured opinions about importance and
  satisfaction on various sales program attributes
• Topics included
• Distribution
• Marketing and sales
• Product design
• Risk and profitability
• Administration and operations
• Life insurance program overall effectiveness
• Significant response discrepancies between banks
  and insurance companies were identified to
  highlight perceptual differences

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Respondent Distribution
Organization Type
Region
Total Sample 76 interviews
Note Percentages based on categorized
respondents.
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Respondent Distributionby Company Size (Assets)
Insurance
Banks
Total Sample 76 interviews
Note Percentages based on categorized
respondents.
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Administrative Attributes
Quadrants of focus Desirable level upper right
high levels of importance and satisfaction High
opportunity Bottom right high importance, low
satisfaction Too many resources Upper left low
importance, high satisfaction Little attention
required lower left low level of importance and
satisfaction
17
POS/Product Integration
Banks rank importance high, yet satisfaction is
low, a 2.9 rating difference Opportunity to
improve Tools/Systems Use of TPM Issues Who will
pay?
18
Bank Staff Training
Raw GAP scores 1.9 difference in level of
satisfaction 2.0 GAP between banks level of
importance and level of satisfaction
19
Insurance Company Compliance Expertise
GAP of 2.5 in level of satisfaction Compliance
expertise is more important to the smaller
banks The larger banks feel they have enough
expertise internally
20
Integration of Administrative Process
Significant area of opportunity for improvement
with a GAP of 2.8 Improvement areas Greater
connectivity for real time responses Facilitation
of product knowledge
21
Licensing Solution Provided by Insurers
GAP of 3.1 in level of satisfaction Banks do not
view this service as important as the
insurers Insurers have historical expertise, but
may place too much of an emphasis on this resource
22
Insurers Sales Support
GAP of 2.5 in level of satisfaction Banks
consider this service to be of vital
importance Wholesaling Customer service Need to
further relationships in a partnership
mode Reduce of relationships
23
Obstacles in Distribution Quality
GAP of 2.6 in level of importance Insurers ranked
lack of senior management support as the 1 most
important obstacle (out of 10) with a 8.1 score
compared to banks 5.5 By contrast to this low
rating, banks rated senior management commitment
a high level of importance in evaluating factors
of selling insurance with a score of 7.8.
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Ongoing Training by Insurers
Ten training areas were ranked, with new product
roll out training considered the most important
by all respondents A 2.2 score gap in
satisfaction, similar level of gap related to all
areas of training Insurers overwhelmingly
considered levels of training to be at high to
adequate levels
25
Obstacles in Selling to Bank Customers
There were 11 obstacles included in the
survey 55 of insurers considered lack of access
the most significant issue Contrasted with 26 of
the banks Banks likely consider life insurance
products as one of a portfolio
26
Effectiveness of Marketing Methods
94 of the banks considered referrals as the most
profitable method Only 59 of the insurers viewed
referrals as the most profitable
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Profitable Selling Methods
Of the 10 methods evaluated agents in branches
ranked first by banks While 31 of bank
respondents ranked this the most profitable
method 31 of insurers ranked this the least
profitable method
28
Product Design
GAP of 1.4 in level of satisfaction Is this
Insurer or Bank responsibility? Is this the
reason for the dearth of life insurance sales?
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BANK INSURANCE PERCEPTION v. REALITY

• Michael Lovendusky, ACLI
• Charles Richardson, Baker Daniels
• Scott Harrison, KPMG LLP
• Carmen Effron, CF Effron Company LLC
• Betsy Cosgrove, Liberty Life Assurance
• Steve Knez, Citibank