Unleashing the Power of Personal Lines Insurance

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Unleashing the Powerof Personal Lines Insurance

• Keith Kremers
• February, 2008
• Wendy McCurdy, Moderator

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Agenda

• Todays Personal Lines Insurance Marketplace
• Challenges for Credit Unions and CUSOs
• Potential Solutions

Poll 1
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Polling Question 1

• Do you currently have a relationship with an
  agency or agents?

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Financial Services Industry TODAY!
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Who Controls the US Personal Auto Insurance
Market?
Poll 2
Source National Association of Insurance
Commissioners Data 2006. All Private-Passenger
Auto
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Polling Question 2

• Have any of your members refinanced loans through
  their insurance provider?

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Insurance Shopping (Property Casualty)
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Whats Competition Doing in Mailbox?

• 7 billion insurance solicitations in 06
• Average 60 per households (HH) annually
• Assumes all HH were being solicited
• Actual numbers 2x-3x this for highly desirable
  demographics think credit cards!
• Includes 3 billion Life, over 2 billion Auto and
  240 million ADD
• GEICO mails approximately 800 Million alone!
• GEICO spends 37.66 per NCA
• NCA new customer acquisition

Sources United States Postal Service
http//www.usps.com/, DM News key trade
magazine http//www.dmnews.com/, Direct
Marketing Association http//www.the-dma.org/ The
Bible of Direct Marketing Successful Direct
Marketing Methods by Bob Stone
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Challenges of Credit Unions and CUSOs

• Revenue
• Economic resources
• Product distribution/member access
• Attaining scale

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Revenue

• Tightening margins in credit unions have made
  positive income from insurance operations a must!
• Average commission is 14 new and renewal
• On average, personal lines agencies delivers
  10.8 profit to bottom line
• Increased focus on products per household

Source The National Alliance Research Academy
"Insurance Agency Growth and Performance
Standards 2006-2007
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Economic Resources

• Inadequate to secure growth
• Inadequate to staff for administrative functions

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Product Distribution/Member Access

• Unable to support call center with extensive
  hours of availability
• Unable to support wide network of local agents
• Unable to support distribution demanded by
  todays insurance buyer

Poll 3
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Polling Question 3

• Which of the following methods does your agency
  use to market property and casualty insurance?

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Scale

• Hours of operation vs. member demand
• Licensing
• Call center support
• Marketing

Poll 4
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Polling Question 4

• What is the most important measurement of the
  success of your insurance affiliation?

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Solution MEMBERS Auto Homeowners

• Positioning and using new channels and member
  distribution methods in a manner where we market
  and distribute around the existing agency and
  provide more revenue and relationships
  opportunities to the overall insurance strategy
  of the credit union and/or CUSO without competing
  for the same members.

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Wrap/Overlay Strategy

• Complements current offering
• Adds no additional cost
• Increases participation/members served
• National presence
• Increase your agent sales force by 1700 local
  agents
• Positive bottom line impact

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Hypothetical Case Study

• 100,000 member credit union
• Owns personal agency
• Trying to increase agency profitability
• Increase products per household

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Current State

• Agency producing 5 million in annual personal
  lines premium
• 700,000 in annual revenue (at 14 commission)
• Approximately 2,500 households served
• 77,000 bottom line profit (11)

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Opportunity

• 100,000 members
• Incorporate CUSO Wrap direct mail channel
• 115,000 of bottom line revenue over 3 years

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Overall Results

• Increase agency profitability from 11 to over
  16
• Increase households served by over 650 in the
  first year
• Create national presence (1,700 local Liberty
  Mutual Representatives)
• Increase the number of products per member

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Revenue ComparisonIndependent Agency vs. CUNA
Mutual Group/Liberty Mutual
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Success Story - CEFCU

• Jim Sarver, Manager, CEFCU Financial Services
• Jim has been at CEFCU in Peoria, IL for 30 years
  and a manager in the CUSO since 1986

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Challenges SolutionsCEFCU
Challenges
Solutions

• Enhancing agency approach with MEMBERS Auto
  Homeowners national program
• Leveraging referrals from other member purchases
  (e.g. loan applications)
• Ensuring strong customer service
• Maximizing channel access

• Carriers entering exiting the market
• Conversions
• Ability to serve all geographic areas

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MEMBERS Auto Homeowners Insurance Program
Contributes to CEFCUs Success
Test September 2006 mailings to small group of
non-Illinois members

• Outcomes
• Combined with incidental sales in all states,
  results were 40 of peer credit unions using the
  full MAH program.
• 86 of all sales from F2F channels
• CEFCU has decided to expand program to include
  Illinois and potentially implement additional
  components of MAH

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Who might benefit?

• Credit unions that own an agency
• CEFCU-like scenario
• Agencies that want to focus on commercial
  accounts and minimize personal lines
• Credit unions that partner with a local agency
• Credit unions using agency for back-room
  administration and referrals

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Next Steps?

• We can help you assess your current program and
  work with you to design a solution to support
  your current program and help you reach your
  personal lines insurance goals.

Call your CUNA Mutual Sales Executive at
800-356-2644.