Credit unions are duking it out with a whole host of competitors, not just banks, so if you aren't selling insurance to your members, your competition down the street will be only too happy to do it for you.
That's the advice, or warning, from insurance specialists around the nation. The relationship between selling insurance and developing member loyalty is a "virtuous cycle," they said-making it a bad idea to surrender the insurance market to your competition.
Asked which comes first, the member loyalty or the insurance cross sale, CUNA Mutual Group's Pete McGuire said, "it's a mixture of both." McGuire is the director of marketing for CUNA Mutual's MemberCONNECT.
Credit unions signing on with CUNA Mutual can choose from auto, home, term life or AD&D insurance, opt for all or take advantage of an existing CUNA Mutual partnership with Liberty Mutual. McGuire said some CUs want a broad palette of products while others might only need two.
McGuire and other experts said CUs must first decide how insurance products will fit into and further their business plans and don't need to worry about being saddled with products they don't need or want. Plus, offering a large array of products they don't need isn't any different from a "fly by night" operation pushing products the membership doesn't need.
"We're offering additional channels (i.e. Liberty Mutual). Nothing is done a credit union doesn't authorize."
McGuire said in 2005, 10 billion insurance solicitations were made to the American public, an average of 100 per household. McGuire and other experts say the days of not selling insurance are numbered.
"If you aren't cross selling, your competition is," he said.
Pushing Back The Competition
In addition to increasing member loyalty and credit union revenue, specialists around the nation suggested selling insurance products offers another benefit: pushing back the competition.
SECU Senior Vice President of Insurance Services Harry Dixon said the Raleigh, N.C.-based credit union giant considers insurance sales to be a wave of the future and is licensing employees for face-to-face meetings with members. Dixon said passage of the Gramm-Leach-Bliley Bill in 1999 blurred the lines between financial institutions, investment firms and insurance companies.
Members will always need insurance, Dixon said, but if your members sit in an investment firm discussing retirement accounts and see a better deal on insurance, they might bite.
Additionally, Dixon said he can see a future scenario of a traditional insurance company moving into banking and then trying to steal a member away from the credit union.
"If our member is going somewhere else, they'll get approached for traditional financial services," Dixon said. "If we can provide that, we'll ward off the competition."
Dixon expects the future to offer "one-stop shopping" insurance for members with licensed SECU employees sitting down with members in each of the $13.7-billion CU's 202 branches.
Experts say there are any number of insurance products to sell and how to place them before the membership: simple brochures, newsletters and definitely on the credit union website.
Dixon said SECU is selecting the face-to-face option for its branches, a full service call center setting and web site applications members can access anywhere.
"By having all of those three methods we think we'll appeal to more of our membership," Dixon said.
To help identify which members need what insurance and when, both Dixon and McGuire tied the various stages of life to different products. Young members starting out in life don't need RV insurance while retirees hitting the American road do, and married couples need insurance for home, auto, life and possibly AD&D.
"Before I got married, I didn't need any insurance," McGuire said.
Dixon said SECU has the ability to track its members needs and can offer insurance products at the right time.
For example, using public records, SECU can learn when a member needs a second mortgage and make its offer before a competitor can.
Yet another reason to sell insurance is to increase the credit union membership base. Carmel, Ind.-based Conseco does the work for its credit union clients, including signing up new members and SEGs.
Driving SEG Penetration
In order to take the insurance plan, a consumer needs to join the credit union anywhere, so Conseco signs them up during a SEG visit, according to Bob Hunt, national VP for specialty markets with Conseco.
Hunt said while Conseco sells its insurance products, its field representatives aid credit unions by adding members and increasing penetration.
"We're there to work with them, to assist them," he said. "The bottom line is: we want to enroll new members. That's what we do."
Hunt said the revenue from insurance products is sizable, but echoed Dixon and McGuire's warnings about looking out for the competition.
Hunt said the rise in the amount of community charters has increased the need for new members and will also add to the rising competition from banks, investment firms and insurance companies. Insurance products will bring in new members and SEGs helping to keep them in the credit union family.
"The ones that can't get new members? They're out of here," he said.
CUJ Resources
For info on this story:
* CUNA Mutual Group at www.cunamutual.com
* Conseco at www.conseco.com
* State Employees CU at www.ncsecu.org
