Survey: Credit Unions Believe in Value of Credit Insurance and Debt Protection, Need to Better Communicate to Members

In a survey of 331 credit unions that make credit insurance (CI) or debt protection (DP) available to members, only one in five said that their members understood their own insurance needs. And while there isn’t a direct correlation, according to CUNA Mutual Group statistics, only about one in five eligible credit union members in 2010 chose to protect their loans with credit insurance.

CUNA Mutual’s 2011 edition of its annual survey on the value of credit insurance and debt protection shows that 84% of respondents offer these products primarily because it helps to cover financial losses for members.

Over 80 percent of respondents also said that credit life and disability insurance are a good value for members. Plus, 91 percent of the respondents said CI/DP is a very important financial benefit to a credit union in that it helps protect the credit union from loss due to death or disability of a member.

Cross-selling seen as essential but unsatisfactory

If credit unions believe so strongly in these products, why do so few members choose to cover their loans? The short answer is inadequate cross-selling.

The overwhelming majority of respondents (92%) said that cross-selling is very important to the success of their credit union, and yet only a third said they were satisfied with their credit union’s cross-selling effort.

The table below shows a clear divide in key cross-selling methods, training, tracking, and incentives used by credit unions that were satisfied with their cross-selling efforts versus those who weren’t satisfied.

 

Cross-selling enablers

CUs not satisfied with cross-selling efforts

CUs satisfied with cross-selling efforts

Product training for loan staff on CI/DP options

83%

95%

Tracking of CI/DP product sales

69%

90%

Sales training for loan staff on CI/DP options

73%

88%

Quote the loan payment with the CI/DP product included

79%

94%

Incentives to loan staff for CI/DP product sales

40%

70%

CI/DP sales goals set for loan staff

48%

77%

CI/DP cross-selling results included in staff and management performance evaluations

44%

73%

The challenges of cross-selling go well beyond payment protection in many credit unions. Even though credit union products and services are designed to serve members’ best financial interests, cross-selling these products and services often isn’t part of a credit union’s culture. Lending staffers don’t want members to feel pressured.

But the realities of this economy make it clear that members need more information about how their credit unions can help them save money and manage risk. With this information, they can make an informed choice about their insurance needs.

Mass marketing alone can’t fill this role—it’s more important than ever for knowledgeable staffers to be able to communicate a credit union’s advantages person to person. Every lending transaction should include an opportunity for members to make an informed decision about protecting their ability to repay the loan.

At the same time, every lending transaction is an opportunity for credit unions to protect themselves from default risk and earn non-interest income that is essential for keeping interest rates competitive.

Rich Trace is CUNA Mutual Group’s Director of Product Management for Credit Insurance. Contact him at 800.356.2644, Ext. 6618, or rich.trace@cunamutual.com.

CUNA Mutual Group is the marketing name of CUNA Mutual Insurance Society, its affiliates and subsidiaries, including CUMIS Insurance Society, Inc. Product availability and features may vary by jurisdiction and are subject to actual policy language. Corporate headquarters are located in Madison, Wis.

 

Questions? Contact Sales & Marketing Associate Craig Reed: 206.340.4789, creed@nwcua.org.

Posted in CUNA.