MADISON, Wis.-Members may be wary to open their wallets for a lot of things, but CUs might find they are more open to insurance products, particularly those that take over loan payments when a member loses his ability to continue paying off the loan.
"Products don't sell themselves," Tom Keepers, director of product management for Payment Protection at CUNA Mutual, said. "It's really a matter of making it a priority. Clearly consumers have a need to be protected from financial hardship especially with what is going on."
With collateral values collapsing whether it be on homes, vehicles or even businesses, members are looking to hedge their bets. Keepers encouraged credit union executives to emphasize insurance at the point of sale on loans and not "make the decision for the member" that they do not want to add the cost of insuring the collateral or other assets they own. Warranties on numerous big-ticket items are becoming more popular in an age when individuals are worried about depreciation and their ability to repay loans, he pointed out, and there appears to be a decent-sized jump in the amount of benefits being utilized.
"We are seeing an increase in benefit payouts in a number of product lines, primarily GAP," Mark Hein, CEO of the Credit Union Division at SWBC told Credit Union Journal. "This trend started in early 08 as the used car market and the exploding gas prices severely hampered the used car market. This is what insurance products were designed to do; pay benefits when they are needed, however, it becomes equally important to increase the member participation in these products to spread the risk."
Making The Pitch
When making the pitch to boost participation, staffers need to emphasize the benefits of the product, and while they should not play on members' fears, they should tap into the very real uncertainty being felt across the country.
"One value proposition is that you are going to help your members if they become disabled or someone involuntarily loses their job," Keepers said. "Credit unions have an opportunity to really ride in on a white horse."
The experiences members have after receiving benefits from insurance products should be pumped "back into the front line staff" and used as cases in point when marketing the coverage.
"When credit unions see benefits being used, they should promote it throughout the organization," Hein argued. "By showing staff that the insurance products helped out a group of members, then they are more likely to 'buy-in' to the marketing of these products and improve the participation numbers."
Use Members As Examples
Of course, CUs need to reach agreements with the members they plan to use as case-examples.
As with other products, demographics play a key role in marketing insurance products, said Bob Hunt, Field VP-Specialty Markets at Conseco.
"If they are not keeping track of their demographics they probably won't be around long," he added, stressing that CUs must move beyond traditional mass mailings and get in front of the membership with the message at every cross-selling opportunity. "Credit unions (should) offer products in different distribution methods instead of waiting for someone to come to them. The banks have been doing that forever. If CUs start developing their own distribution... to actively market products available to fill various gaps in people's coverage, I think there is a ton of money to be made."
Credit unions could even take a cue from phone and cable companies that market themselves as "one stop shops" for all their customers' communication needs by offering television, home phone and Internet services under one roof. Adding insurance to investments and day-to-day financial transactions would give CUs the ability to say that they can help grow and protect all of their members' assets.
"Don't be afraid to outsource," Hunt added, pointing out Conseco not only markets health insurance to members and potential members but also brings in new deposits and accounts. "The more people on the street you have singing your hymn, the better off you are."
