The Financial Services Modernization Act of 1999 has allowed banks of all sizes to sell insurance services in their branches. TowerGroup estimates that the sales of individual life insurance products by banks during 2001 was a minuscule 3% of total premiums written, but that this figure will grow steadily over the next several years.
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The Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley) has allowed banks of all sizes to sell insurance services. TowerGroup estimates that the sales of individual life insurance products by banks during 2001 was a minuscule 3% of total premiums written, but that this figure will grow steadily over the next several years.
To be successful in selling life insurance products, bank staff should look carefully to the skills and abilities of life insurance agents: Bank employees cannot sell complex insurance products without developing new sales, marketing, and servicing skills. Bank employees also need to address the relevant (and not inconsiderable) licensing/training issues.
In financial services, an aphorism states that consumers buy banking products and agents sell insurance products. In the latter half of 2002, both banks and insurers have adopted a vision of customer relationship management that works for their respective industries. The differing business models in the two industries have given rise to differing skill sets and emphases. Insurance firms have developed certain CRM skills in marketing/sales/service and banks have developed others. Banks that wish to sell insurance products in their branches would do well to emulate the CRM skills of insurers.
When life insurance products are sold in the retail bank branch, the clash of cultures between the two industries could easily threaten success. Although some FSIs will spend considerable time and resources searching for the "right" business model (buy an agency, co-market with an agency, hire agents to sit in branches, license branch staff for insurance sales), TowerGroup recommends that they start from a different perspective and look to the skills that each industry has mastered over the years.
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