As banks plunge into insurance sales, they are trying to turn themselves into a different kind of marketer.
In a round of interviews, the chiefs of bank insurance agencies said they worry that as bankers they aren't born salespeople - and they realize they must transform themselves to capture this market.
In addition, some griped that their banks' managements still treat the business as a stepchild. And others said state regulations that keep some bank employees from selling insurance are hurdles to being profitable in the business.
The biggest obstacle we've had is internal credibility of insurance as a product line.
The insurance business has not generated a whole lot of trust and is not necessarily held in a high regard among bankers. Insurance salesmen have typically been fully commissioned, not needs-based sellers of products, but we see that coming more in line.
Gaining greater credibility is a perception issue. It's getting a lot better and within the last few years banks have made a lot of progress, but they're still just scratching the surface.
There just aren't senior executives who have insurance at the forefront of their minds.
Executive vice president, Irwin Union Bank and Trust
The Barnett case and the OCC ruling make it pretty clear that banks are going to be very much in the business of selling insurance. ... (But) the states are now going to become very involved in setting up some new laws and regulations.
For instance, an Illinois rule proposes a lending person can't sell insurance. That makes sense. You don't want anybody sitting in front of a customer saying 'Oh, you want to have a loan? Well, let's see. Would you want to buy our insurance?' That would be coercive.
However, in our branches the same person who may take a lending application one day could be selling an annuity to someone else two days later. The legislation wouldn't allow the selling of the annuity.
'People who are involved in lending can't sell insurance' is basically how it reads. In the future you want to watch your state laws and you want to be part of them being made.
Moira J. Murray
Vice president, SPF Insurance Agency Inc., St. Paul Federal Bank for Savings Franklin Park, Ill.
The biggest obstacle bankers have to overcome is themselves.
Most are very good at servicing and selling bank products, but they're very limited in their scope. When they get into insurance products, they're competing against professionals in a competitive environment.
And you get these bankers who are stuffed shirts who want to limit their products, who want to make a profit on every transaction. Most banks, though they treat customers well, have a take-it-or-leave-it approach to their banking:
'This is the rate we offer on our CD - if you like it, fine; if you don't, try to get something else.' When they're dealing against insurance companies, brokers, and their products, they have to become more customer oriented.
Most banks dictate when they have their in-house training programs and their customer relations, and everything else, it's coming from a banking perspective, not from a competitive brokerage environment.
Investment services, Merchants Bank and Trust West Harrison, Ind.
In order to have a profitable insurance operation you need to be able to offer different kinds of contact to the customer. There is that customer that will be happy to buy by mail or in the lobby, but many customers still want that special one-on-one with an insurance person.
They want know that you have the ability to handle all of their insurance needs, whether it be life insurance, disability, annuities, or their business insurance. Customers at times think that someone who is selling insurance in the lobby of their financial institution may not have the expertise to do that.
Banks have to let people know that they are selling insurance. They have to do it consistently. They have to do good research on the products that they offer, not only to be sure that these are products that their customers want, but products that their customers would buy from them.
VP and agency manager, Redfed Insurance Services, Redlands (Calif.) Federal Bank
The biggest obstacle banks face is being able to integrate the process of selling insurance within the bank's structure itself. More specifically, I think a bank should acquire or work in partnership with a professional insurance operation and then support it in ways the bank is technically and financially capable of doing. By doing so, it will have a much stronger and viable operation.
What I'm saying is, take the best that you can find from the insurance community, make that part of the bank, and use it as your method of distribution. It's a lot stronger to build upon the strengths an agency has established than to start something totally from scratch.
President and chief operating officer, Standard/Curti Insurance Agency Inc., Standard Federal Bank Troy, Mich.
Thrifts and banks have been trying to promote the wrong products. We've spent a lot of time selling insurance products which really don't earn very much money.
We need to focus on what the most profitable product set is, sell the product which earns superior returns, and distribute that product through a dedicated sales force.
I don't want somebody who also opens up checking accounts, CDs, and other depositary products to be selling insurance products. I want a very well-trained salesperson who is knowledgeable about assessing customers' needs and selling a specific kind of product.
If you pollute your focus by giving this as a me-too product set for a sales force with lots of other stuff to do, it won't work very well.
John D. Koch
Executive vice president, First Northern Insurance Agency, Charter One Financial Cleveland