CARMEL, Ind.-Finding alternate sources of revenue is a priority in the current economic environment, and placing a stronger priority on insurance products could help boost the bottom line, according to several experts.
Conseco Field VP-Specialty Markets Bob Hunt said credit unions have been far too hands-off in their approach to the insurance market in the past. Now in a time when members are looking to protect any and all of their assets, insurance products need to be put out in front of the membership with a strong message.
"I've been in this business 26 years and they've had a golden opportunity for many, many years. Typically credit unions wait for people to come to them. You don't see many of them trying to reach out to their existing membership unless it's a direct mail program," Hunt pointed out. "I think they are missing off-balance sheet income if they don't put some people in place that are aggressively marketing those products."
Commitment Is Needed
Credit unions need "a commitment and push from the senior management to encourage and empower the staff with a strong sales culture," Mark Hein, Credit Union Division CEO at SWBC, told Credit Union Journal. "Without the sales culture change, it will be continue to be difficult to improve credit union performance in insurance sales."
Unlike other fees, insurance fee income does not hurt the relationship with members as the premiums they pay go to work for their benefit. While helping members hedge against the unforeseen, insurance fees also provide a steady source of income for a credit union that does not require investment on the institution's part.
"Credit unions, just like other institutions, are challenged with their expense ratio," noted Tom Keepers, Director of product management for payment protection at CUNA Mutual Group. "The nice thing about products and services like payment protection is that you don't have to add staff."
Providing A Measure Of Protection
The products themselves also provide a measure of protection for the credit union, especially in the case of health insurance such as cancer and heart disease protection.
"Medical expenses that people can't pay is the number one cause of bankruptcy in United States," said Hunt, noting failure to have the proper coverage against catastrophic illness can quickly turn a financially healthy members into liabilities. "And it's only going to roll uphill to the credit union.
And the message appears to be one to which members are receptive; Hunt said sales were not falling off a cliff unlike many other products in the financial world.
"As bad as everything is, there hasn't been a drastic downturn like you'd think."
The specter of the recession "really raises the opportunity for people to think of their exposure," Keepers pointed out, and that includes credit unions. CUs would be wise to stay on top of benefit usage, which could be a trigger that members need financial planning assistance. Though benefit usage does not normally tick up during bad economic times, save for products like job loss coverage, members tapping their benefits can be an "inflection point" to start a conversation about their broader financial and personal situations.
"Ultimately it depends on your membership and your lending practices," said Keepers when asked what credit unions should do when they see members using their insurance benefits. "It's up to the credit union leadership to make that a priority."
