BISA Magazine - Quarter 1, 2015 - (Page 15)

n old Bob Mittel M aybe the whole bank insurance paradigm needs to be rethought. "Banks have not been successful in marketing life insurance products," said Marc A. Vosen, president and CEO of Key Investment Services, the retail investments unit of KeyBank (Cleveland), even though the industry has been talking about it for the past 10 years and longer. "The needle hasn't moved." "If you look at life sales in banks and you strip away single premium whole life insurance (SPWL)" - just an annuity with a death benefit, in the view of many - "and you strip away instantissue term life," then the share of program revenues from what is left (i.e., recurring life insurance) "is less than 1 percent, which is terrible," Vosen said. "Investment professionals are not insurance professionals," Vosen stated. "They don't want to be insurance professionals, and they don't know how to be insurance producers." Needle Hasn't Moved Life insurance began gaining traction in retail bank investment programs about 10 years ago, according to consultant Frank Berkowitz, but in the past two years, it has stalled; indeed, it began declining, according to recent Bank Insurance and Securities Research Associates (BISRA) numbers. That is disturbing, according to Berkowitz, who conjectures that many institutions are giving up. Frank Berkowitz Marc Vosen The needle hasn't moved? "That is a very fair statement," answered Berkowitz, who used to run the investments and insurance program at Astoria Federal Savings and Loan (New York), where he was considered one of the more successful life insurance practitioners. Overall, "you can't argue with the numbers," agreed Robert J. Mittel, vice president at Prudential. That said, "We do see results among some depository institutions that have committed to best practices." Insurance now accounts for 20 percent or more of brokerage program revenues at institutions like First Tennessee, First Niagara and Astoria Federal; and this goes beyond SPWL and instant-issue term life, Mittel said. These are institutions that have been at it for some years, he added; 18 years or more in some cases. Berkowitz isn't quite willing to give up, either. Banks cannot lose sight of the big picture. Banks want to become their clients' trusted advisor, after all, "but if we go through that whole [financial planning] process, and identify needs, and if we're not also doing life insurance, then we're doing that client a disservice." "Financial advisors are often kicking and screaming about life insurance," added Berkowitz, "but you have to make them do it, because it's the right thing for the customer." Licensed bank employees (LBEs) can sell inexpensive life insurance policies, 15 BISA Magazine

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BISA Magazine - Quarter 1, 2015