Insbanc thinks it has found the key to selling life insurance in banks - changing the sales process to "distribute an uncomfortable product in a comfortable environment."
So says Fiore Settembre, a former Chemical Bank executive who is now chairman and chief executive officer of the Owensboro, Ky.-based Insbanc, an insurance agency that places its sales reps in banks.
Insbanc, which is on track to sell $5 million of life insurance this year through 14 bank partners, is successful because it integrates the insurance and banking cultures in its sales process, Mr. Settembre said.
Most life insurance agents make people uncomfortable, he said, by scaring them with worst-case scenarios to get them to buy. But at a bank, he said, "their job is to make you as comfortable as possible so you leave your money behind."
To successfully sell life insurance in that environment, Insbanc has adapted many features of the bank culture. It trains and employs the sales reps in bank branches, "and all of our agents are on salary and quarterly bonuses," not commission, said Eric Anderson, the president and chief operating officer. He co-founded the company with Mr. Settembre in 1999. Bank employees are also generally paid this way, and it takes the focus off the immediate sale, he said.
Reps do not push products but do an analysis and then give people time to make a decision. In fact, Mr. Settembre said, most sales are not made in one day and often require more than one meeting. "We can't rush our customers," he said. This runs counter to the traditional insurance sales culture, which preaches "there are only two ways you leave a home or a business, with an application or a police escort."
Insbanc is so intent on not using the typically pushy life insurance sales techniques that it does not hire experienced "retread" life insurance salespeople, he said. Instead, the company recruits on college campuses, hiring young people who are new to the industry and can be trained in Insbanc's approach.
Mr. Anderson, a former infielder in the Houston Astros organization, has a lot of contacts with college baseball coaches and uses those relationships to find potential reps when Insbanc starts a program with a new bank.
Reps are not judged solely on sales production, Mr. Settembre said. Each customer who buys a policy gets a phone call the next day to ask about the buying experience, including the reps' professionalism and the coherence of their product explanations. "We graph that and give that back to the bank on a monthly basis," he said; each agent must maintain a 92% customer satisfaction rating.
The executives said that Insbanc makes a large financial outlay to bring life insurance into a bank, hiring reps and training bank employees to make referrals, so they demand top-level commitment from the bank. "We're very selective," Mr. Anderson said. "That's why we go through so much of this process up-front."
Insbanc meets with top executives during several weeks to develop a plan for the bank, then holds "training sessions for everyone in the bank from the president to the janitor," Mr. Settembre said, so that they know how to introduce customers to the life rep.
"Life insurance is a timing sale; people buy insurance when it's the right time," he said. "We want the bank to be the destination of choice when the customer decides to buy life insurance."
Current clients include $1.2 billion-asset Peoples First Community Bank in Panama City, Fla., and Republic Bank and Trust Co. of Louisville, Ky., with $1.6 billion of assets. These banks give Insbanc reps desk space in their branches, and the banks and Insbanc share marketing costs and sales revenues.
Mike Ringswald, a senior vice president at Republic Bank and Trust, said that working with Insbanc was a low-cost way to start selling life insurance. "We didn't want to make that big of a commitment to the life insurance and annuity products until we had a chance to see how these products were accepted in our marketplace," he said.
Republic has worked with Insbanc for about a year and a half, he said, and though life insurance is not a major profit contributor, it broadens the bank's financial product menu.
Raymond Powell, the president of Peoples First, said he had been skeptical about having outsiders work in his branches but has been very pleased overall. "They've made an effort to recruit very congenial and intelligent young people," he said, "and I think that's the key to their success with us."
The relationship offers "limited risk and tremendous upside potential for noninterest income," he said.
Insbanc is strongest in Florida, Kentucky, and Indiana, Mr. Settembre said. It is also looking to expand into Texas and California, he said. Because of the cost of setting up a program, Insbanc tends to look for larger partners when it expands into a new area.
For banks that don't fit that profile, a book will be published in January outlining Insbanc's sales process.
Mr. Settembre said his target customer is "Larry Lunchbucket," a Middle American whom he says the life insurance industry has been ignoring for years. The average age of the Insbanc customer is 39, and 50.1% are women, he said. The average policy is for $125,000 of coverage and costs a little less than $70 a month. About half the sales are of term insurance, and the other half are of permanent life products.
Insbanc also sells about $100 million of annuities a year, Mr. Settembre said. This is a relatively easy sale in banks, he acknowledged. Banks sold $37.8 billion of annuities last year.
He said Insbanc is primarily a life insurance sales organization, however, and this makes all the difference.
In the future, Insbanc would like to expand into products such as long-term-care and Medicare supplemental insurance. Mr. Settembre said Insbanc is not interested in offering auto and homeowners policies itself but could form a partnership with another company to offer these products through banks.
Banks have struggled to sell life insurance, said Kenneth Kehrer, the president of Kenneth Kehrer Associates in Princeton, N.J. Banks sold $452 million of life insurance last year, compared with the billions they sold of annuities. In the first half of 2002, banks have sold $314 million of life insurance, he said.
Though he doubts there is any single answer for improving those numbers, "one force to make it happen are things like what this company is doing, trying something new, trying a new approach."
However, Mr. Kehrer said, the hurdle for banks sales is not the stereotypical hard-sell by life insurance agents but that bank reps have not been selling energetically enough. Banks must reconcile the need to keep customers feeling comfortable with the goal of making sales numbers, he said.
