Strategies for Increasing Insurance Sales
by: Scott Stathis, Managing Partner, Stathis Partners, LLC; and Joe Black, VP, Head of Bank and Wirehouse Sales, National Western Life
It’s difficult to find an executive in the bank, investments and insurance channel who will deny that life insurance represents one of the biggest unrealized revenue opportunities, yet for the past two decades, it’s tough to find many organizations that have succeeded in moving the needle.
Life sales, as a percentage of the revenue mix, has been essentially stuck at 4 percent on average for as long as most of us can remember, although most executives haven’t given up on the opportunity, and many are left wondering what it will take to get advisors to start paying more attention to their client’s life insurance needs.
The life insurance “cause” may benefit from the current fiduciary tailwind. An increase in the amount of financial planning being done in the channel seems to be having a positive effect on life sales in some organizations, and the trend toward fee-based business may soon provide advisors with life insurance compensation alternatives.
A recent Stathis Partners survey indicates in those institutions where at least two-thirds of the advisors are generating at least six financial plans per year, the amount of life insurance revenue generated per million dollars of core retail deposits was 71 percent higher than in the firms with less financial planning participation.
On the compensation front, there is pressure for insurers to explore offering trail options. Actuaries will need to sharpen their pencils to determine if trail options can be offered to meet the demands of advisors and institutions looking to increase recurring revenue streams.
Also, in an effort to simplify the sales process and respond to the success of simplified underwriting of single premium life policies, insurance companies are now considering lower death benefit options with the same reflexive underwriting. Advisors traditionally don’t like walking customers through a full underwriting process, and this could alleviate some of their angst in offering protection products to their clients.
Sticking with product evolution for a moment, other developments include the addition of new index universal life policies as an alternative to term and permanent whole life.
In another product diversity effort, some insurance companies are offering foreign national products to meet this client need based on specifics like country of origin, death benefit, net worth and their affiliation in the United States.
In addition, future success will be aided by the evolution of automation supporting the life sales process. Life insurance technology is slowly improving its ability to reduce friction, improve speed and provide an intuitive and seamless process for transacting a life insurance sale.
Back to the strategy side of the equation, we are seeing success in firms truly committed to a life insurance specialist strategy. Although in many instances the mean time to payback on these positions can be up to three years, the benefits can be significant. Organizations employing life specialists generate 42 percent more life revenue in their product mix and produce twice as much life insurance revenue per million in retail deposits.
We are also seeing significant increases in life sales among organizations forging tighter co-departmental relationships. For example, organizations forging effective business relationships with Private Banking produce 81 percent more life insurance revenue in the product mix and 118 percent more life revenue per million of retail deposits.
Licensed platform bankers selling life insurance are also making a difference. Those institutions which use platform reps to sell life insurance realize 43 percent more life insurance revenue in their product mix and 81 percent more life insurance revenue penetration.
Many of these and other successful strategies will be explored in much more detail in a soon-to-be-released ABA whitepaper which will include new Stathis Partners research on life insurance sales best practices.
Besides the fact that helping bank clients with their life insurance need is the right thing to do, there is evidence that clients purchasing life insurance through the organization have deeper relationships with the organization. More research still needs to be done in this area; however, there are indications that clients purchasing life insurance tend to be more loyal to the institution, hold more products from the institution, are more profitable, keep more of their assets with the institution and have higher customer satisfaction scores.
Acting as a True Fiduciary
If you’re a financial advisor and not talking with your clients about their life insurance needs, then you are not acting as an “advisor” in the true sense of the word.
While life sales success has historically been hard to come by, there are financial institutions out there proving it can be done. These firms seem to share four common elements of successful life sales: top-down support from senior management, a point person responsible for driving the success of the program and a relentless commitment to the cause.
Now is a great time to re-examine your commitment to life insurance sales!