ING Leads With Term Life in Niche Sales Strategy

ING Group NV's U.S. life insurance business has found a wealth of new assets by selling term-life products to lower- and middle-income individuals through niche marketing and alternative distribution channels.

Catherine Smith, the chief executive officer of ING U.S. Insurance, said that by targeting investors with income below $100,000, specifically in Asian and Hispanic communities, over the past 12 to 18 months, the New York unit of the Dutch financial services firm increased its sales by 49% last year, to $347 million, and gross premiums by 2%, to $1.99 billion. Sales rose 60% in the first quarter from a year earlier.

"ING was very focused on selling life insurance to the high-net-worth market," Ms. Smith said in an interview last week. "We want to still be strong in that market, and it is continuing to grow, but we saw that there was an overwhelming opportunity with underserved Americans in the middle market and we knew there was an opportunity to approach that market with term-based products."

Ms. Smith said that by going after this audience, ING added a good number of companies, including banks and brokers, to its product distribution network. It is "attracting new distributors to the tune of 700 per week," she said.

"We have developed products that are competitively priced and structured," she said. "So now we are starting to get attention from people that didn't traditionally sell ING products."

Analysts said competition has increased in the life insurance business over the past three years, but most distributors are sticking with well-established brands such as Hartford, Pacific Life, MetLife, and John Hancock.

Ms. Smith said this has forced ING to be more creative.

In the past two years, in addition to increasing distribution through traditional life insurance agents, ING has been selling its insurance policies through banks in statement-stuffer direct mailings, as well as through life insurance Web sites such as Selectquote, Ms. Smith said.

A spokesman said ING is working this strategy through "a growing handful" of banks, including Citigroup Inc., Washington Mutual Inc., and Bank of America Corp. Ms. Smith said 25% of ING U.S. Insurance's sales volume is coming from these alternative channels.

"We are getting quite good returns on both of these efforts," she said. "The ING brand really resonates extremely well with consumers."

ING began direct-mail sales of life insurance products through banks in 2006.

"It is more challenging to get on shelves at banks," Ms. Smith said. "It can be really slow to get going, but now that the brand is better established and our track record is gaining traction, we are going to be more successful selling through banks."

ING hopes to sell its term-life policies through banks that focus on the Hispanic and Asian communities, Ms. Smith said.

"We are finding a lot less penetration of life insurance in those communities and a lot less understanding of the benefits of having these types of policies," she said. "These are certainly niches where we believe that we can accelerate and grow faster."

In the Hispanic market, ING is emphasizing sales through banks in Southern California and southern Florida that primarily serve Hispanics. It also aims to increase sales through banks that cater to Chinese- and Korean-Americans, Ms. Smith said.

"We look at those two areas, in terms of Chinese- and Korean-Americans, and they are growing faster than the average of other Americans by quite a bit," she said. "We think that developing sales and expanding our reach in those areas will be critical to our overall growth strategy."

ING has added "a few" people to concentrate on selling its life insurance products to Hispanics and Asians, but Ms. Smith said the effort is still in an early stage. "Our connections to those markets and communities are off to a good start," she said. "We only really began specific nationalities six months ago, and we think there is a lot of room for growth."

ING plans to continue to lead with its term-life products in these niche markets. It has found that after a customer buys a term-life policy, there is an opportunity to cross-sell other products, including a universal life insurance policy.

"We expect reps to constantly be revisiting the customers to re-examine what they need and how their life insurance needs have changed," Ms. Smith said.

ING U.S. Insurance offers policies ranging from term-life products to estate planning and universal life insurance policies for high-net-worth investors. It also offers return-of-premium policies and mortgage term products.

"As a starter product for middle-income Americans, term life is really the right thing to start with, but in time there are some opportunities to sell additional products," Ms. Smith said.

In marketing term life to lower-income investors, she said, ING has repriced it three times in the past 18 months to "make it more competitive. We want to be in the top three in terms of pricing in term life."

Term-life sales make up the majority of ING's new application volume and account for about half of its premiums; the category accounted for less than 10% of sales before 2006, Ms. Smith said.

She said she does not expect 50% growth each year but that she hopes ING will be able to post double-digit growth annually. Considering the life insurance market usually grows 3% to 4% a year, double-digit growth would be strong, she said.

"We've been able to maintain a lot of growth without adding a lot of wholesalers by focusing on some key areas," she said. "A lot of distributors are coming to us now, and part of that is because of what we are doing in these alternative channels and part of it is because of the communities we are going after."

ING would like to widen its distribution through banks, Ms. Smith said. "Bancassurance has never really been a big thing in the United States, but there is really an opportunity to develop life insurance sales through the bank channel in this kind of niche play that we are hoping for."

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