Joining the parade of insurers trying to sell insurance through banks, MassMutual is playing a fanfare for some products geared to bank customers that it hopes will differentiate it in a crowded marketplace.
John P. Sousa 4th, the newly appointed vice president of financial institutions at the Springfield, Mass., insurer's annuities unit - and a great-grandson of the bandleader and composer of the same name - notes that shelf space for insurance is limited at banks.
So far, MassMutual has developed two products specifically for the banking distribution channel: a customizable annuity and a wealth transfer product that turns a tax-deferred annuity investment into life insurance. More are in the works.
"Ninety percent of all major insurance companies are selling through banks," he said. "We come on board and make it 91%, but we are going to produce products where we can build our own shelf space."
Though MassMutual is new to bank distribution, it can build upon the efforts of earlier companies, Mr. Sousa said. "It's an interesting opportunity to perhaps do some interesting and unique things in the bank channel."
"We can develop relatively new and unique products that will be very well serviced in the bank channels products where customers have more say," he added.
Mr. Sousa had built a career in insurance distribution through banks at his own firm, Investment Program Management, and at SunAmerica Life.
At MassMutual product development for the banking channel is in its early stages, Mr. Sousa said, adding that the company intends to market annuities, life insurance, disability insurance, long-term care, estate and financial planning services, and a suite of products for small business, including 401(k) products and other employee benefits.
One product currently being developed is a flexible annuity that is to have 10 or 12 options; these would let people customize such features as the annuity's surrender costs.
Another new wrinkle is a wealth transfer product that lets older people with tax-deferred annuities transfer the money to a life insurance contract so that their beneficiaries won't have to pay heavy taxes when the insured dies.
"Dying with a tax-deferred annuity in your estate is the worst thing," Mr. Sousa said, because beneficiaries must pay regular income taxes on the money that has accrued, unlike a life insurance benefit. If elderly people are sure they won't need the money - if their retirement needs are covered otherwise - they could use this product to transfer the annuity money to a life insurance contract over a period of years and minimize the income tax burden, he said.
"We're dressing up life insurance," Mr. Sousa said. An added advantage of this product for banks, he said, is that "for the dedicated rep, this is a way to get them started selling life insurance."
"All the products are going to be lead generators for the reps," Mr. Sousa said. Ideally, these products will come with an existing niche of bank customers to sell to, he said.
For example, banks could sell the wealth transfer product to customers who bought annuities several years ago, he said. And the small-business package would be geared toward business banking customers. "This is a way to build additional relationships with the customers," he said.
Successful sales through banks require insurers "to overcome the mentality of the distribution channel" and devote resources to developing sales and training bank employees about the products, according to Michael D. White, president of Radnor, Pa.-based Michael White Associates, a consulting firm. "It's a completely different marketplace, with a completely different culture."
Though the products under development are to be branded with the MassMutual name, the company also plans to build proprietary products and private-label products for banks, Mr. Sousa said.
All of these products will be heavily supported, he said, with dedicated wholesalers and marketing materials that the bank representatives can use.
Mr. Sousa explained that his company is working on systems that will let sales reps model certain products' returns for individual customers at the point of sale, comparing, for example, the taxes on a tax-deferred annuity with those on MassMutual's wealth transfer product.
The insurer also plans "to make the underwriting process almost see-through" so that people at all levels in the bank can sell MassMutual products, he said.
In addition the company plans to offer these products to banks that want to sell both in their branches and online. "We're going to be very aggressive in building these products for banks who not only want to sell the products in the branches but also online," he said. "Everybody's talking about" online sales, "but we're doing it."
Mr. Sousa declined to discuss sales projections but said the first MassMutual annuities will be sold through banks in the next 90 days.