Selling group benefits strengthens a bank's ties to small businesses, and can enhance revenue for a variety of other insurance lines offered by the bank, according to Mr. Leary. Again citing LIMRA data, he noted that group disability sales increased 8 percent in the first quarter of 2001 compared to the same period last year, while group life during that time grew even more impressively–42 percent for both term- and permanent life.

Small businesses needing a way to recruit and retain employees want to offer benefits, even though many can afford to offer only employee-paid or voluntary benefits, Mr. Leary noted.

American General has 34,000 small-business clients for various group plans, mostly life and long and short-term disability, he added. Of these, 31,000 have fewer than 50 workers. AG sells the plans through a variety of channels, including banks. With its recent acquisition by New York-based AIG, the combined company ranks number 12 in the employee benefits marketplace, he said.

Kevin Gannon, president of Niagara Benefits Group in Williamsville, N.Y., urged banks to see themselves as a way to help fill the benefits advisor gap for small businesses. Fewer than half of small businesses have an advisor who assists with benefits purchases, according to Mr. Gannon, whose company works with American General, banks and other partners to administer benefit plans.

Offering bundled benefits helps a bank take advantage of the needs of this market, he said. Typically, such programs consist of an HMO, plus dental, disability, group and individual life, and administrative services. “This is a natural product for banks. You have the customer base,” he said.

Banks are a good channel for producing group benefits programs because small-business owners want to work with advisors they already know, he observed. “My company will write 12,000 new contracts this year, 10,000 of which will be for businesses with under 50 workers,” he said.

Another advantage of going after small employers is their endurance as customers, with about 90 percent staying with his firm year after year, he said. Most of those who leave do so only because theyve gone out of business or been acquired, he added.

Financial institutions can often work with insurance carriers to co-brand products for small businesses, he noted.

Banks can often make inroads by showing small businesses how they can offer a full range of benefits at no cost to them, through voluntary benefits that fit the needs of people at various stages in their lives, Mr. Gannon said.

Not all employers will be ready to take on a bundled package of benefits, he noted. But once an initial product is introduced at a work site, an entr?e is gained to offering more and more benefits, he added.

Trevor Thomas is an assistant editor with NU's Life & Health/Financial Services edition.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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