- June 2, 2015
- Posted by: Steven Patrick
- Category: News and Views
Banks partnership with insurance providers can be instrumental in providing guidance on what Medicare options are best to maximize customer satisfaction and generate greater revenues.
Each day more than 10,000 Americans turn 65 – a market segment often referred to as T-65. This age group is now at the beginning of the long-awaited onslaught of the “Baby Boomer” generation, which is expected to continue growing at a 10K per day pace for the next 18 years. With this growing market, banks must find ways to better serve and attract individuals 65 and older, especially in a time when customer loyalty and revenue are major concerns.
According to one poll from Gallup, the number of Americans expressing a “great deal” or “quite a lot” of confidence in banks fell to an all-time low of 18 percent. While that number has slightly increased to 23 percent more recently, there is still an urgent need for banks to offer products and services that help restore trust within the banking industry. In addition, the Durbin amendment (passed in 2010) significantly limited interchange fees, which impacted banks’ rewards programs – traditionally leveraged to strengthen customer relationships – and negatively affected banks’ income.
Some banks have eliminated rewards programs altogether, and some have even imposed additional fees, such as ATM fees – neither of which is seen as a popular decision with consumers. However, there is an alternative solution. As Baby Boomers surge into the T-65 market, banks have an opportunity to offer specific products and services applicable to these individuals, such as Medicare. But does your bank have the right insurance partnerships to capitalize on this huge influx of seniors? Are you offering the right products? Does your bank effectively communicate with the T-65 market? The success of a bank’s insurance product line could be dependent upon these factors.
Offering the right product in light of all the turmoil in today’s economy is very difficult, as the T-65 market tends to be fiscally conservative.Because of this annuities have been a big market for banks, but few are looking beyond investment products towards those that protect consumers, such as health insurance. There are extraordinary opportunities in this emerging market, and banks are well positioned to take advantage of them by offering traditional insurance products, like Medicare Supplement, Graded Death Benefit Life, and Hospital Indemnity. These products are all still successfully sold in today’s market, just not by many banks.
Banks should also consider offering new products that will appeal to the T-65 market. Many individuals age 65 and older will now be enrolled in Medicare, and furthermore will be prime prospects for drug, dental and eye care plans as well as diabetes products. As individuals approach their 65th birthday they are bombarded with information about Medicare, as well as various options that ensure they have all the medical and life insurance protection neededin cases of unforeseen loss. Most of this information comes to them through either direct mail or the Internet. Direct mail, however, can be overwhelming and easily thrown out.
Digital communication is also problematic. Even though more and more seniors are online, a study from the Newspaper Association of America showed that less than a third of individuals over 65 shop online. As a result of overwhelming and unfamiliar communication, some very intelligent people feel lost and helpless reviewing mass mail and emails, thus creating a need for more sensitive, person-to-person communication. In fairness, it is not an inability of those 65 and older to understand Medicare, but rather there is a need for the information and the process to be simpler.
Many T-65 individuals will spend a substantial amount of time enrolling in Medicare, but then become discouraged by the overwhelming process and instead decide on a supplement. To avoid the hassle and frustration, many individuals will simply go with the first agent who appears on their doorstep or calls them on the phone – even if they know the product is not the best fit.
To improve communication, consider creating personalized interactions for each customer, such as keeping track of personal information including birthdays, number of grandchildren, interests and hobbies – all of which can be tracked through a customer relationship management (CRM) system. This type of interaction not only improves communication with customers, but also helps build long-term relationships with them. In addition, it is necessary to provide continued communication through the customer’s preferred method of contact, including phone, email responses, mail and text alerts. If they prefer to communicate over the phone and mail versus through the Internet, use those communication channels and refrain from emailing information.
Just as important as addressing communications, is the aim to simplify the entire process for those in the T-65 market. For instance, managing the paper work on their behalf or walking them through the application process over the phone can be immensely effective. This is key to improving service and maintaining a competitive edge. Individuals suddenly find themselves at age 65 and are now considered a “senior citizen” – sometimes triggering depression. Additionally, many of these individuals begin to retire or find themselves physically unable to work. In some cases, they are living on a fixed income.
By expanding into the Medicare advisory role, banks can help their customers make better decisions, while increasing their “share of wallet” and earning commission in the process. All it takes is partnering with the underwriters, who provide the best Medicare options, through an intermediary well versed in these options. Most individuals conduct all of their banking at a primary financial institution – mortgage, checking account, life savings and bill-pay, etc. These same individuals are in need of different insurance products than they were earlier in life. So why wouldn’t banks offer these insurance products too?
In a time where financial institutions are looking for additional ways to generate revenue and improve customer satisfaction and loyalty, banks have an opportunity to partner with Insurance providers. This partnership can be instrumental in providing guidance on what Medicare options are best for their customers, as well as supporting them through the confusing enrollment process.
Jon Hamilton, President of Insurance Services
Jon T. Hamilton, heads up Premier’s Insurance Division. He came to Premier from Dialogue Marketing, where he was VP of Strategic Solutions. During Jon’s 40-year career, he has run Operations and Client Services for several companies, including Colonial Penn, Y&R, SafeCard Services, ICT Group and TCIM Services. He was also a Founding Partner at InterMedia Marketing, specializing in insurance call center services. Jon is Past President of the American Teleservices Association (now PACE) and Past Chair of the DMA Teleservices Council.