In this document, Val Jordan explains why insurance agencies and carriers looking to increase sales and explore new ways of doing business should consider working with community banks, for several reasons.
Community banks have a clear advantage over their larger competitors in forging relationships with their customers that build loyalty and trust. They have the customer information at their fingertips that many of their huge competitors spend time and money seeking through data mining.
Second, community banks know not only who their customers are, but also what they need now and will need in the near future. This is vital information when your existence depends on the viability of the services you offer.
Third, with the growing number of mergers among large multi-state banks, many community bank executives are eagerly anticipating a wave of defections by customers fed up with mergers, as well as the larger market share they can garner where branches will be consolidated.
Community bankers are ready to introduce insurance into their mix of financial products and services. Insurance companies have a vast arsenal of products, such as Term, Universal, and Variable Life, Group products, Long-Term Care, and Employee Benefit products that are well suited for sale through community banks.
The key ingredient that will unite a community bank and an insurance carrier is the insurance agency — whether internal, external, or custom-built. The agency will give a bank's insurance venture both its focus and its structure.
If you combine the product-centered marketing and sale support functions traditionally provided by an insurance carrier with the customer-focused marketing, sales, and field underwriting an agency provides, you have the foundation for a hybrid agency structure, which can supply the best of both worlds, from pre-sale to post-sale.
Hybrid agencies, born out of relatively new bank-insurance program ventures, are third-party marketing organizations that provide training and marketing support for back office and sale reps — something that insurance agencies don't usually do.
Remember, insurance is primarily sold, not bought. Thus, marketing is far more sophisticated and multi-faceted, because it focuses on the customer, not the product. A hybrid agency in a bank must be able to support not only traditional face-to-face sales, but also call centers, direct response programs, investment programs, and Internet activity.
Smaller banks are looking for strong partners to help them train bank personnel to use a needs-based selling-consultative approach, as opposed to their existing transactional environment.
They want an agency that's a partner to them, and can help both in the sales process and in moving their business through the channels to delivery.
Banks require strong sales support through illustrations, plan design, phone support for questions, and online access to keep them up-to-date in monitoring their programs.
Such needs put the onus on an agency to be more creative in how it markets. Once an agency is affiliated with a bank, it becomes accountable to the bank, because of the stricter regulation under which it must now work.
This checks-and-balances approach requires the agency to inform the bank of the status of such sales cycle steps as referrals to appointments, appointments to sales, and sales to post-sale activities — a level of accountability an agency did not traditionally have.
Bank-affiliated agencies committed to becoming hybrids must bear in mind that their relationship with the bank will differ from how they have worked as independents. Much time in a bank is spent managing the relationship between the bank and its personnel. Agencies must be aware that this is a full-time, ongoing process.
As a member of the bank's team, the agent needs to keep all parties in the insurance sale fully informed of any progress with a specific bank customer.
The customer belongs to the bank, and the agent is there to provide a service to that customer. Just as bank reps must learn to intensify their selling techniques (qualifying prospects, profiling customers, and initiating sales), agents and agency managers working at a community bank must learn to do more hand-holding. They must learn to listen more patiently, lengthen their selling cycles, and get a better understanding of how to keep in touch with the customer and the banker. That's why it's so important to teach both agents and bank reps to sell consultatively.
Too many bank-insurance programs fail because not enough quality time was spent in managing the program relationships.
Also, the typical successful independent agent won't necessarily be the most successful in a bank environment. The top producer in an agency, is usually the ultra-assertive A1 Driver personality type who works alone — the pit bull who doesn't let go until the customer signs the paperwork.
Although agencies encourage and applaud this killer attitude, it simply can't be transplanted into the bank environment. Aggressiveness, competitiveness, and speed will only work in banks with a strong team culture. A bank-based agent must never forget that they're a member of a team, brought into the sales process as the insurance expert by bank personnel. Working alongside the trust officer, the loan officer, the investment banker, the branch manager, or the investment rep, the agent should take a more consultative approach and operate as a member of a team putting forth an integrated sales strategy.
On the regulatory side, to work the community bank market, agency management needs to both understand and adhere to additional requirements.
Community banks selling insurance products fall either under the Office of the Comptroller of the Currency Inter-agency Guidelines governing the sale of non-deposit investment products, or under state regulations for banks selling insurance.
Thus, producers in agencies that affiliate with community banks must know what they can and can't say, the proper disclosure language and forms to use, how to handle complaints, and how the agency should be structured to handle bank business in their state.
Community banks provide fertile ground in which to cultivate insurance programs, and the agency provides the necessary nourishment to support that growth. But what about insurance companies — the suppliers of the seed?
Insurers will have to change the way they work both with community banks and the agencies that will affiliate with them by:
- Developing training modules that cover consultative selling, people skills, and relationship management;
- Creating mentoring programs to help bank sales personnel;
- Developing selection tools to aid in recruiting sales reps suitable to the bank culture; and,
- Installing oversight programs to monitor all aspects of the venture.
Community banks, because of their customer focus, will prove worthy partners by providing a consistent, steady stream of business. It's up to the agencies that work with the banks, and the insurance companies that provide the product to make the relationship work.