Online Insurance Starts To Click With Banks

Featured Article - Spring 2013 | By Gina Lauer

ONLINE SHOPPING has become a way of life these days. People are drawn to websites where they can research, compare, and buy products in a few quick, easy steps. And that cyber-shopping process is a model that more businesses are trying to emulate — including financial institutions.

Curren Coco, Regions Insurance Group

Jim Bruene, editor and founder of Online Banking Report, writes in his study “Selling Insurance Online” that there is a “huge opportunity” for financial institutions to sell insurance via their websites. “Banks, already positioned as the center of most people’s online financial life, are in a prime position to leverage that trust into the insurance sector.”

“Get a quote” buttons are appearing more frequently on banks’ insurance web pages, and some even lead to a “buy it now” opportunity. Most financial institutions, Bruene says in the report, use the brokerage model and act as independent agents representing several carriers. Some, however, use one carrier exclusively for certain products. Outsourcing is a viable option, too. Several companies now specialize in insurance technology platforms geared specifically to banks and credit unions that want to offer insurance online: everything from property and casualty (P/C) to business and life insurance. And a growing number of bank and credit union executives have started to look seriously at the advantages of promoting and selling insurance through an online channel.

One of the often-cited benefits of offering insurance products online is to generate additional revenue, particularly as financial institutions look for ways to replace dwindling fee income. But one of the most basic reasons: making customers aware that the bank has an insurance program. Selling insurance products to existing customers can also increase “stickiness” or customer loyalty.

Regions’ online program

Regions Insurance Group (Birmingham, Ala.), an affiliate of Regions Bank, recently launched a new online life insurance platform on its insurance website where customers can “educate themselves about life insurance, shop for, and purchase a policy on our secure website,” said Curren Coco, president and CEO of Regions Insurance Group, in a press release.

‘We use the online platform for life [insurance] ... to round out the suite of products that we have online.’ — Curren Coco, Regions Insurance Group

“We use the online platform for life [insurance] ... to round out the suite of products that we have online,” Coco later told BISM. Regions Insurance had already been offering online quotes (from multiple carriers) for auto and homeowners insurance through its website for about a year. “We wanted to let our clients choose what channels to do business through.”

Some products can be purchased online without assistance; others cannot. “How far you can go through that process online” varies by product and by state, Coco explains. In the case of homeowners insurance, an agent is needed to complete the process. The new life insurance platform, however, does allow a qualified customer who wants an “instant issue” product to complete the purchase online—no medical exam is required and forms can be signed electronically.

Adding revenue isn’t the only reason Regions initiated an online strategy. As Coco explains: “I’m sure we’ll drive some revenue through it, but that’s really not the driver behind it. It’s more about having a holistic offering for our customer base.”

John Clifford, a partner with National Brokerage LLC, which provides the online life insurance solution for Regions as well as about a dozen other banks and credit unions nationwide, says the online life insurance option is a way to reduce the amount of work and time typically required in the application and underwriting process. Regions uses National Brokerage (with offices in Boise, Idaho and Tampa, Fla.) for all of its life insurance business, Coco says, from online all the way to high net worth individuals.

Life insurance companies have been struggling to find ways to reach “middle-market” customers, particularly the younger demographic, which is more Internet-focused and used to quick transactions. “Life insurance suffers because most of it’s not Internet based, most of it is not transactional,” Clifford says.

“We believe there’s a large bank customer base who are no longer in the branches,” he says. “They’re not talking to life insurance salesmen, either. They’re just kind of untouched by the life insurance industry, and we feel this, over time, is the way to approach them.”

Markham McKnight, BancorpSouth Insurance Svs.

BancorpSouth Insurance Services (BIS), which is made up of five well-established insurance agencies acquired between 1999 and 2012, is one of the largest independent insurance agencies in the nation. But BIS is largely a commercial property and casualty operation. Finding a way to serve the insurance needs of bank customers has been somewhat elusive.

‘We’re reaching the underserved, small business account much, much better.’ — Markham McKnight, BancorpSouth Insurance Svs.

“What we found out is, I’m not really that smart when it comes to cross-selling,” says Markham McKnight, president, BIS. He says the insurance agency was having “a difficult time applying traditional principles to go after a new set of customers.”

“We have a large mortgage company,” notes James Threadgill, BancorpSouth’s vice chairman. “Everybody that takes out a mortgage on their home has to have insurance. It’s very difficult to service that kind of activity through the traditional agency,” he says.

“The traditional distribution system really doesn’t provide an efficient way to drill down into the customer base of the bank’s customers,” says McKnight.

The new integrated insurance program has been especially helpful for BancorpSouth’s bankers because they simply pass an insurance referral on to a virtual agency. “Our virtual agency basically acts as the gatekeeper as to where the line of business will be best serviced,” McKnight says.

“The interesting thing here is that it’s eliminating the confusion among the bankers about, ‘how do I get that referral to the agent?’” he explains.

“And quite frankly, 80 percent of our bank customers probably fit in a call center approach,” says McKnight. “They’re not the kind of account our traditional commercial agencies would go after.” And as a result, “we’re reaching the underserved, small business account much, much better.” The bank has about 350,000 retail customers and 50,000 small business customers.

The online component, notes Threadgill, allows customers to shop for insurance at their convenience — even if it’s 2 a.m. It provides a “modern-day model” to customers who don’t want to be constrained by traditional business hours.

The program was launched by the bank last fall — after about a year of exploring and development. Even now, the online strategy continues to evolve. “We have just begun rolling out the commercial piece, where we’re going to be offering free no-obligation quotes to our clients who are borrowing money,” McKnight says. Life insurance was recently added online as well.

The online strategy overseen by Insuritas includes placing ads for insurance on the homepage, both a banner ad and an ad that moves across the middle of the page. Also on the BancorpSouth homepage is a “quick-quote” box that invites visitors to “get a quote” by entering their zip code. Chesky says he’s found that these added features all help increase the “click-through” rates to the insurance agency portal.

Insuritas uses Google Analytics to track online insurance visitors and sales at client websites. “What we’ve learned is that we can actually get better sales rates when we watch how the customer is actually clicking around on that site, looking for products and services,” Chesky says.

For example, when a “quick-quote” box was displayed after a customer logged out from online banking, “we actually got a 326 percent increase in insurance shoppers,” he says. “So what we’ve learned is ... there are places in the bank’s website that are optimal for ecommerce activity—and they’re not the places you’d think.”

Although online insurance activity is showing promise, most say it will take time for the online strategy to gain traction. “It’s still in its early stages, especially for banks,” notes Regions’ Coco. He describes results so far as “good,” but not great. The online channel, Coco notes, tends to draw “price sensitive” customers. Those aren’t generally the type of customer the insurance agency hopes to serve. For example, an online shopper might opt for state minimums on a policy, whereas the goal of the insurance agency is to make sure policy coverages are in line with that person’s needs.

Why is there hesitancy on the part of many banks?

“I believe it is mostly culture and lethargy,” says Chesky. “And it may take another 10 or 15 years, but once banks start to figure this out, they will realize the powerful potential of their websites as ecommerce sites.”

Still, banks want to make sure they get the “customer experience” right. Also, it takes time to “vet” such a project and make sure the bank’s IT and marketing departments are on board.

Chesky expects his bank and credit union clientele list to double this year. Currently Insuritas works with about 50 financial institutions nationally, ranging in asset size from $75 million to $15 billion in assets. The company recently upped its insurance product offerings, adding AD&D (accidental death and dismemberment) insurance, identity theft coverage, pet insurance, emergency medical insurance, roadside assistance coverage, and extended warranty protection.

“My estimate is that by the end of 2013, we will have over 50 insurance products and services that will be available to be shopped and purchased inside the bank’s insurance agency portal,” he says.

Chesky also tells an interesting anecdote that suggests online insurance shopping appeals to all ages. He says the company tracked a 76-year-old who visited BancorpSouth’s insurance website, compared auto policy quotes, and then purchased the policy online. “What we believe is happening ... and the bank data will suggest ... is that online banking is attractive to every generation of consumer.”

Tips for banks: Emphasize the ease and speed of the quote; cross-sell at log-in and log-off; use humans to close the deal; and provide incentives to complete the process, says Bruene.

Bruene agrees that online insurance “has great potential” for banks. But it can be a major undertaking: understanding the opportunity, how you’ll sell it, who the competition is, and how to compete with other insurance carrier channels. “It’s just not a quick hit,” he says.

Bruene’s report, published in December 2011, offers a lengthy list of tips for institutions to consider when putting insurance offerings online. For example: Emphasize the ease and speed of the quote; cross-sell at log-in and log-off; use humans to close the deal; provide incentives to complete the process.

“I just think it’s a win-win,” he says. “You can help the customer, and you can make some incremental profits off of it.”

Gina Lauer is a contributing editor of Bank Insurance & Securities Marketing. She can be reached at glauer@bisanet.org.