LONG ISLAND CITY, N.Y.-Most credit unions do a disservice to their members and their bottom line by not focusing on insurance as a core member need, according to one person.
"It's like a credit card or a mortgage; it's very important to people and we're doing them a disservice if we're not offering them the solutions that they need," said Stephen Ryerson, VP of financial services at United Nations FCU and president of its CUSO, UNFCU Financial Advisors.
"Credit unions must come to the conclusion that insurance is a critical component of our members' needs. It comes down to really acknowledging that this is a core product and not an ancillary offering."
Home and auto insurance are currently the top-selling lines at UNFCU Financial Advisors, and while Ryerson didn't have specifics available, he said that year-over-year growth for 2011 "was well into the double digits." He estimated product penetration at about 3.5% of UNFCU's 94,000 members, and said that the credit union's goal is to reach double digit penetration by 2016. It uses its own internal agency to sell insurance, with reps in-branch to serve members.
While home and auto continue to be big sellers, Ryerson suggested that credit unions should focus on credit disability and debt-cancellation insurance products in 2012.
"Most credit unions don't have insurance staff, so they tend to look at outsourcing things," he said. "To me, that's not the most effective process."
The solution, he believes, is the sort of product that can be built into a loan with minimal cost to the credit union. The product could be tailored for death, disability or, in some situations, unemployment, and staff can be trained to incorporate the sale of that insurance product into the lending process. In addition to protecting the member, it also allows the credit union to develop a small, supplemental revenue stream.
UNFCU has also seen success with a credit card-based guaranteed-issued life insurance program, which it launched last year and which is tailored to its diverse, worldwide membership ("
The program has sold more than 900 policies in 100 different countries through a partnership with Clements Worldwide. Members with UNFCU's Visa credit cards can enroll in the program (which is billed through the Visa card) to receive life insurance coverage worldwide, including for high-risk locations, protection in case of war, terrorism or political-related violence. The coverage also serves as a stop gap to supplement other insurance plans.
Getting Consumers Motivated
"All the data indicates that the American public in general knows that they're under-insured," said Ryerson. He added that most people aren't motivated to solve that problem, but a product like this makes it easy because it links it directly to the credit card.
Ryerson noted that a lack of awareness often prevents even the most loyal members from utilizing a credit union's insurance offerings.
"I think we have a significant amount of inertia by credit unions-maybe even at the board level-that these products are not ancillary," he said. "At UNFCU, 2011 saw us reinforce right from the board down to every staff member that insurance, for instance, is a core retail services product."
Reyerson added that while insurance products do not generally drive membership growth, that doesn't have to always be the case. "I think back to the strategic positioning of these products; if the understanding exists that these are core, a lot of credit unions could go into their communities and leverage these as a way to drive member growth," he said. "That might be the initial point of contact and other services could come after the fact."
