MADISON, Wis. - Legislation that could negatively affect one revenue stream and the current mindset of consumers may combine to make the sale of insurance products more important sources of fee income.
"There are definitely opportunities for credit unions to serve more members with their existing products, and I think insurance is one area where members are going to back to," said Bill Jolicoeur, vice president and product executive for CUNA Mutual Group.
"I think credit unions are still thinking about courtesy pay as their leading means of getting non-fee income. So from a revenue standpoint, I don't think insurance has moved up a few notches," Jolicoeur said.
But federal legislation aimed at reforming courtesy pay/overdraft protection may change that pretty quickly, and Jolicoeur believes that Congress will but a cap on those programs and limiting the revenue stream.
"If that happens, then credit unions are going to have to look for other income and insurance will rise," he added.
Ryan Olson, vice president of lending at Heartland Credit Union, said that his institution is taking a hard look at incorporating insurance product fees into its standard revenue portfolio and will be taking advantage of a surge in member penetration in the last two years.
"Margins are getting tighter and tighter and with margins getting tighter you want to find more non-interest income sources and we don't want to raise our members fees," he added.
Conseco field vice president Bob Hunt called his firm a "strategic partner for business development for credit unions," touting the direct approach that the company takes as it sells insurance products directly to employee groups. He noted that credit unions "need borrowers in the worst way" and taking the message to that borrowing demographic will boost the credit union bottom line without costing the institution a dime.
"You are going to earn fee income from every member I bring on board," said Hunt.
Through its credit union partnerships, Conseco sells insurance for specific medical conditions-products Hunt said are like GAP insurance to cover the "holes" in some health insurance plans. In a situation where a family member has a serious condition, such as cancer, Hunt noted that more than half of the expenses involved in the care for that person are not medically related. If the usual breadwinner must take unpaid leave or quit his or her job, finding the funds to carry on is extremely difficult, especially in a time when home equity is at its lowest ebb.
"If somebody becomes critically ill, and they don't have income coming in, where do you think they are going to get the money?" Hunt said.
"Not only is it wise for the consumer, but it is also wise for the credit union to make sure that collateral is in a better position if there is a disability or family medical leave take place," agreed Jolicouer. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com/ http://www.sourcemedia.com/
