Why do people pick one brand of insurance over another? That question, posed by Brad Young, director of loan and risk management for Southwest Business Corporation (SWBC) was one of several he asked of attendees at NACUSO's Fall Leadership Conference here to get them thinking about the marketing of insurance products to members through CUSOs.
In a business that has been both migrating to the financial services sector since the passage of Gramm-Leach-Bliley, and then emigrating with Citibank's planned spin off of Traveler's, Young said the credit union brand is still "one of the strongest overall regional brands in the financial services industry."
People buy insurance based on familiarity and trust, he stressed, so it is possible for credit unions and their CUSOs to make inroads in the insurance market, but they must first make a serious commitment.
"Don't kid yourself," Young said, "an insurance agency is first a sales organization." Take time to make (or transform) your agency into a sales-oriented culture, he advised. Set sales goals because "what gets measured gets done."
His other advice: pick products that meet the needs of prospective buyers, based on a careful analysis of member demographics. Understand that insurance margins are very low, the market very competitive. "You don't need to have the lowest price, just a competitive one. And don't expect that if you hang out a shingle, they will come to your door," advised Young, himself a 20-year veteran of the business.
Young spoke of the options available to CUs and CUSOs with regard to either buying an insurance agency (and its book of business) or developing an agency in house by outsourcing and integrating with a provider.
The value of the average agency has declined from 25% to 50% over the last seven years due to factors such as the reduction in commission rates by companies, higher loss ratios and encroachment into personal lines by direct writers (the greatest example of which is direct sales through the Internet.) While it may still be a "buyer's market," nine out of 10 agencies for sale are in trouble, he warned. Do the due diligence, he said.
Because the CU brand is critical, Young advised CUs to "remain true to your brand whenever possible." The integrated solution can best work with a provider that is willing to mix and match capabilities for the marketing and distribution of personal lines insurance products. He added that any partner should be able to make the buying process easy for members, quote on high quality and competitively-priced products, and do it all through all available CU marketing avenues.
