DO BANKS NEED MORE meeting and incentive programs to help jump-start their life insurance sales? A recent study spearheaded by the American Council of Life Insurers suggests that they do.
When the Gramm-Leach-Bliley Financial Services Modernization Act became law five years ago, permitting banks to affiliate with insurance companies to provide one-stop-shop financial supermarkets, it was expected that the insurance end of the banking business would snowball. But the initial excitement never blossomed into robust life insurance sales. The ACLI study, “Bridging the Cultural Divide between Banks and Life Insurers,” polled both banks and insurance companies to find out why.
Overall, the study says that “banks and insurers are still seeking common ground, particularly in distribution, marketing and sales, product design, risk and profitability, administration and operations, and effectiveness.” How can meetings help them do this? Bank respondents cited the need for more life insurance product training. Insurer respondents suggested that banks can improve on their lackluster insurance sales by holding more regular business-planning meetings, as well as setting production goals and implementing incentives that help integrate life insurance sales goals with bank sales goals. “To engage senior management support, insurers increasingly realize the need to integrate insurance into bank goals and reward programs at all levels of management,” said an ACLI executive summary of the study.
Study recommendations on how banks can achieve greater insurance sales point to the effectiveness ofmeetings and training meetings. Specifically, banks should provide wholesaler training and conduct more frequent meetings between the senior staffs of banks and insurers “to build a dynamic sense of partnership,” says the study. Carmen Effron, president of study sponsor and bank insurance consulting firm CF Effron Co. in Westport, Conn., says that training is critical. “We looked at the effectiveness of 10 different types of training for bank staff and found some significant gaps between what banks think and what insurers think,” she says. “We need more meetings to discuss training issues in depth, and to figure out what the training should include and how it should be done.”
The study, which was released in October, is based on 76 completed questionnaires: 36 from banks and 40 from life insurance companies. In addition to CF Effron Co., it was co-sponsored by Baker & Daniels, an insurance and financial services company, and KPMG LLP, an accounting and tax firm.