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2011 NAFCU Annual Conference and Exhibition


Debt Protection and Credit Insurance
Benchmarking Survey Results
John Gibbons
National Sales Director
Securian Financial Group, Inc.

June 30, 2011
Background and Objectives


    •   NAFCU Services Corporation and Securian Financial Group (NAFCU Services’
        Preferred Partner for Debt Protection and Credit Insurance products) partnered
        to conduct research with NAFCU member credit unions regarding their
        experiences with Debt Protection and Credit Insurance products
    •   Objectives: to provide credit unions with benchmarking data to use when
        considering Debt Protection versus Credit Insurance and what contributes to
        overall program satisfaction and success




2
Specific Measurements


      •   Factors contributing to the overall satisfaction and success of credit unions
          with Debt Protection programs
      •   Factors contributing to the overall satisfaction of credit unions with Credit
          Insurance programs
      •   Credit union likes and dislikes of both programs
      •   Peer recommendations and what to avoid when implementing Debt Protection
      •   Reasons why credit unions have considered Debt Protection in the past and
          why they will reconsider the program in the future




3
Methodology


      •   Securian’s market research department, Securian’s financial institution division
          and NAFCU Services created an online survey delivered to NAFCU member
          credit union managers with “lending” titles
      •   The survey was delivered to all NAFCU member credit unions, regardless of
          Debt Protection and/or Credit Insurance provider
      •   The study was conducted in two phases in the spring and fall of 2010; the
          second was added to increase overall response and make the data more
          meaningful
      •   In total, 121 out of a possible 749 responses were received, yielding a 16%
          response rate




4
Who Offers
    Debt Protection?


       •   A total of 20% of respondents currently offer Debt Protection
       •   Nearly half of respondents offering Debt Protection implemented their
           programs during the past two years, with the highest concentration in 2008 and
           2010
       •   Debt Protection is more prevalent among respondents with larger asset sizes

                                  Year Debt Protection
                                     Implemented

                           Not Sure                      33%
                               2003        4%
                               2004        4%
                               2005        4%
                               2006        4%
                               2007        4%
                               2008               17%
                               2009             13%
                               2010               17%

                                      0%        20%      40%

5
Debt Protection
    Protected Loan Types


           •          Loan types most commonly protected within Debt Protection programs are
                      Consumer, Home Equity and Credit Cards


                                                                 Debt Protection Product Types Offered


                                    Consumer loans                                                                   92%

                                                                                                         71%
                                Home equity loans



                                       Credit Cards                                          54%


                                    Mortgage loans               13%


                                            Other*          4%


                                Commercial loans       0%

     n. 24; Select all that apply
     *Other: Vehicles only
                                                      0%           20%          40%           60%              80%    100%
6
Debt Protection
    Protected Events


       •   Protected events most commonly offered are Death and Disability, both at 96%
           and Involuntary Unemployment at 67%
       •   Death and Disability are the most commonly offered protected events across
           all product types, followed by Involuntary Unemployment, Hospitalization and
           Family Leave respectively

                                             Events Covered by Debt Protection
                                                                                                 96%
                                                   Death
                                                                                                 96%
                                                Disability
                                Involuntary unemployment                                 67%
                                           Hospitalization             13%
                                             Family leave          8%
                                                   Other*         4%

                                                             0%        20%   40%   60%    80%   100%


            n. 24; Select all that apply
7           *Other: Loan default
Debt Protection
    Influencing Statements


       •   “Protecting credit union assets and “providing members a variety of benefit
           options” top the list of statements that most influenced the decision to
           implement a Debt Protection program
           –    “We were offering straight credit life/disability products and decided to
                offer the debt protection coverage to help our members in involuntary
                unemployment situations”




8
Overall Satisfaction
    with Debt Protection


       •   Overall Satisfaction with the credit unions’ Debt Protection program is high at
           81% (based on the sum of the top two ratings)
       •   “Provider administration services” and “Program design” top the list of Debt
           Protection program aspects that satisfy the most

                                Overall Satisfaction       Percent
                                                             %
                                      Very Satisfied – 7     33

                                                      6      48

                                                      5      19

                                                      4       0

                                                      3       0

                                                      2       0

                                   Very Dissatisfied – 1      0

                                                  Total      100
                     n. 21
9
Debt Protection Program
     Likes and Dislikes


       •   When asked to identify what respondents particularly like about their Debt
           Protection program, “Easy to use and offer” and the “ability to tailor the
           program to best meet their needs” are most commonly mentioned
           –    “Easy to use, claims process is very good”
           –    “That we were able to make the price more affordable for members”
           –    “Our ability to set the parameter and pricing margins for each product”
           –    “We were able to tailor our own pricing and product combinations for the
                best value for our members”
       •   No common themes are apparent regarding particular dislikes of their Debt
           Protection program
       •   The few items identified include lack of core processor support, program
           exclusions and desire to increase penetration


10
Debt Protection
     Program Changes


       •   Most respondents indicated they have NOT made changes to their Debt
           Protection program since initial implementation
       •   Verbatim comments referred to the addition of incentives, re-pricing and
           adjusting benefits:
           –    “Incentives are now paid and management’s focus on the program”
           –    “We re-priced some of the plans”
           –    “Increased covered limits”




11
Debt Protection
     Program Experience


       •   64% of respondents who implemented             Percentage Protected Loans Increased

           a Debt Protection program indicate their                                    Less than 10%
                                                            21%        21%
           protected loan volume has increased
                                                                                       10% - 24%
       •   When asked to indicate by what
                                                          21%                          25% - 49%
           percentage, responses range from
                                                                      36%
                                                                                       50% & Above
           1% to 53%; half of the percentages
                                                                                                   n. 14
           reported are from 25% and above
       •   42% of respondents indicating an
           increase have had their Debt Protection program in place since 2008
       •   Of those seeing no change in their protected loan volume, 75% implemented their
           program in 2010
       •   Only two respondents indicate a decrease in protected loan volume


12
Debt Protection Program
     Fee Income Experience


       •   55% of respondents who                  Percentage Loan Protection Product Fee Income
                                                                     Increased
           implemented a Debt Protection
                                                                                   Less than 10%
           program indicate their fee income
                                                             17%     25%           10% - 24%
           increased
                                                                                   25% - 49%
       •   When asked by what percentages,             17%
                                                                                   50% - 74%
           responses ranged from an increase             8%
                                                                   33%             75% and Above
           of 3% to 100+%; half of percentages                                                     n. 12

           reported are from 30% and above
       •   42% of respondents indicating an increase have had their Debt Protection
           program in place since 2008
       •   Of those seeing no change, 75% just implemented their program in 2010
       •   Only two respondents indicate a decrease in their fee income


13
Overall Success
     with Debt Protection


        •   Overall success with the credit unions’ Debt Protection programs is high at
            91% (based on the sum of the top two ratings)

                                         Overall Success           Percent
                                                                     %

                                      Extremely Successful - 4       26



                                                              3      65


                                                              2       9


                                       Not at all Successful - 1      0


                                                          Total      100

                              n. 23




14
Overall Success
     with Debt Protection (cont.)


        •   Respondents were asked to identify the two most important factors contributing
            to their credit union’s Debt Protection success
        •   Training programs are mentioned most often, followed by:

                        Debt Protection Success Factors                   Percent
                                                                            %
                                                              Training      26

                                                                Pricing     18

                                                    Variety of coverage     18

                                                                  Easy      15

                     n. 17 participants, 34 responses




        •   Respondents cite insufficient staff training and staff’s lack of sales culture as
            explanations why their Debt Protection Program is less successful


15
Overall Success
     with Debt Protection (cont.)


        •   Factors contributing to success
            –   “Training of staff on how to sell product”
            –   “Ongoing training to reinforce benefits”
            –   “Member affordability”
            –   “Fair cost/benefit”
            –   “Providing a more diverse loan protection product for members”
            –   “Program simplicity”
            –   “Sales incentives”
        •   Factors contributing to less successful programs
            –   “We need to train more staff on how to offer it to our members”
            –   “We do not have a sales culture at the credit union.”




16
Peer Recommendations
     for Debt Protection


       •   When asked what recommendations for success respondents would offer to
           another credit union considering Debt Protection, common themes include
           offering staff training and incentives to sell Debt Protection
           –    “Do it now, and make sure you incorporate continual periodic training
                updates and follow-ups with your staff”
           –    “Train and incent”
           –    “It is a good move to work with their consultant to develop plans their
                members will buy”
           –    “Determine needs of your member in this economy”
           –    “Partner with a company that can give you the flexibility to tailor the
                program to your membership”
           –    “Cover unemployment risks”
           –    “Either go all or none in the program. Do not split as we did between
17              credit life and disability and debt [protection].”
What to Avoid When
     Implementing Debt Protection


       •   A question about what to avoid when moving to a Debt Protection program
           yielded little response; no common themes are apparent
           –   “There’s nothing to avoid, but be careful and do your homework on setting
               pricing and margins for the products”
           –   “Make sure the data processor can handle another protection program”




18
Those with No Debt Protection
     Program in Place


       •   52% of those without                                      Reasons Debt Protection Not Pursued
                                                                             Other*                            44%
           a Debt Protection program                                  Too expensive                      33%
                                                                 Product complexity                17%
           in place have considered                       Technology requirements                 15%
           offering one at their credit                    Lack of member interest            13%
                                          Minimal fee income generation anticipated           11%
           union                                     Life events covered insufficient        9%
                                                          Benefit terms inadequate           7%
       •   Among those who did
                                                                                        0%        20%    40%         60%        80%         100%

           not consider offering Debt                                                                                  n. 54; Select all that apply


           Protection, explanations include common themes such as lack of
           awareness/understanding, no interest in product, too expensive and not a
           priority
       •   Of those who have considered offering Debt Protection the below reasons top
           the list of why the credit union did not pursue a program (the majority of “Other”
           responses include themes such as “currently considering” and “not a priority”)
19
Reconsidering Debt Protection
     in the Future


        •   83% of those without a current Debt Protection program indicate they will
            reconsider it in the future
                          Will Reconsider Offering Debt Protection         Percent
                                                                             %
                                                                 Yes          83
                                                                  No          17
                                                                Total        100
                           n.96




        •   77% of respondents might consider offering a Debt Protection program in the
            next two years

                          Timeframe Credit Union Might Reconsider          Percent
                                           Offering Debt Protection           %
                                                     Less than one year       39
                                                             1 – 2 years     37.5
                                                             3 – 5 years       6
                                                      More than 5 years        0
                                                                Not sure     17.5
                                                                   Total     100
                           n.80



20
Reconsidering Debt Protection
     in the Future (cont)


        •   “Protects credit union assets,” “Provides members a variety of benefit options”
            and “Generates credit union income” top the list as reasons why respondents
            will reconsider offering a Debt Protection program in the future
            –      “Periodic review of products to ensure we are offering the best to our
                   members”

                                                  Reasons for Reconsidering Offering Debt Protection

                                                       Protects CU assets                                           78%
                        Provides members variety of benefit options                                             74%
                                                    Generates CU income                                       68%
                                                   Meets members' needs                                   64%
                     Flexibility in program design, pricing, marketing                                  58%
                                                 Is affordable to members                         48%
                                               Reduces CU licensing costs             15%
                                                                  Other*         8%

                n. 80; Select all that apply                                0%    20%       40%    60%          80%       100%
21
Who Offers
     Credit Insurance?


        •   A total of 90% of survey respondents offer a Credit Insurance program at their
            credit union
        •   Some credit unions seem to be offering both Debt Protection and Credit
            Insurance




22
Overall Satisfaction
     with Credit Insurance


        •   Among those with a Credit Insurance program, overall satisfaction is modest at
            45% satisfied (based on the sum of the top two ratings)

                                       Overall satisfaction with Credit               Percent
                                                   Insurance Program
                                                                                         %**
                                                                Very Satisfied - 7        14.3
                                                                                6         30.5
                                                                                5         27.6
                                                                                4         17.1
                                                                                3         6.7
                                                                                2         2.9
                                                          Not at all Satisfied – 1         1
                                                                            Total         100
                         Credit Insurance Not Offered n. 12

                         n.117

                      **Percentages based only on those with a credit insurance program (n. 105)




23
Overall Satisfaction
     with Credit Insurance (cont)


        •   Respondents rating their satisfaction as a 3, 2, or 1 were asked to expand on
            why they are not currently satisfied
            –    “Expensive for members”
            –    “It’s not the carrier; it is simply the fact that people today in our credit
                 union are not interested in credit insurance”
            –    “Very little interest from members for simple life/disability”
            –    “Very restrictive and premiums are high. Limited member interest due to
                 price points.”




24
Credit Insurance
     Likes and Dislikes


        •   Ease of selling/administering and member benefit top the list of most
            commonly mentioned aspects of respondents’ Credit Insurance programs they
            particularly like
            –    “Easy to understand and administer”
            –    “Meets our membership needs”
            –    “Convenient and relatively inexpensive”
            –    “Protects the credit union, good income”
            –    “Excellent customer services in handling claims”




25
Credit Insurance
     Likes and Dislikes (cont)


        •   Respondents who currently offer Credit Insurance were likewise asked what
            aspects, if any, they particularly dislike about their program
        •   Among those offering feedback, “doesn’t meet needs,” “challenges with the
            claims process” and “price” are the most commonly-mentioned aspects they
            dislike
            –    “Limited in the types of events covered”
            –    “Lack of options”
            –    “Difficult claims process”
            –    “Cost compared to protection”
            –    “Rates are too high”
            –    “Unable to pay incentives to MSRs and Loan Officers since it is an
                 insurance product and they aren’t licensed”
            –    “We don’t make enough money on it”
26          –    “We have branches in 3 states, 3 different rates”
Key Takeaways


       •   Although only 20% of respondents offer Debt Protection, they are significantly
           more satisfied and see more success with this program than those who offer
           only Credit Insurance (81% versus 45%)
       •   More than half of those with Debt Protection in place saw increased protected
           loan volumes and fee income
       •   According to your peers, Debt Protection program success can be attributed to:
           –   Effective staff training (both in-house and from your provider) and
               motivating sales incentives
           –   Prudent design and pricing that meets your members’ needs
           –   Offering additional protected events, such as Involuntary Unemployment
               coverage, to meet member needs




27
Key Takeaways (cont)


       •   83% of credit unions who have considered Debt Protection in the past will
           consider it again in the future
           –    Strong desire for product education and design/pricing consultation
           –    A Debt Protection needs analysis is essential
       •   Although overall satisfaction with Credit Insurance was low in this survey, it
           remains a viable product that a majority of credit unions continue to offer




28
Thank You


       •   For more information on the survey, please visit our booth in the Preferred
           Partner Pavilion or http://www.nafcu.org/securian
       •   For more information regarding Debt Protection or Credit Insurance, including
           client research Securian has conducted in the past:


                                    john.gibbons@securian.com
                                            612.234.1018
                                     Follow me @securianjohn




29

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Debt Protection & Credit Insurance Benchmarking Survey Results (Credit Union Conference Session)

  • 1. 2011 NAFCU Annual Conference and Exhibition Debt Protection and Credit Insurance Benchmarking Survey Results John Gibbons National Sales Director Securian Financial Group, Inc. June 30, 2011
  • 2. Background and Objectives • NAFCU Services Corporation and Securian Financial Group (NAFCU Services’ Preferred Partner for Debt Protection and Credit Insurance products) partnered to conduct research with NAFCU member credit unions regarding their experiences with Debt Protection and Credit Insurance products • Objectives: to provide credit unions with benchmarking data to use when considering Debt Protection versus Credit Insurance and what contributes to overall program satisfaction and success 2
  • 3. Specific Measurements • Factors contributing to the overall satisfaction and success of credit unions with Debt Protection programs • Factors contributing to the overall satisfaction of credit unions with Credit Insurance programs • Credit union likes and dislikes of both programs • Peer recommendations and what to avoid when implementing Debt Protection • Reasons why credit unions have considered Debt Protection in the past and why they will reconsider the program in the future 3
  • 4. Methodology • Securian’s market research department, Securian’s financial institution division and NAFCU Services created an online survey delivered to NAFCU member credit union managers with “lending” titles • The survey was delivered to all NAFCU member credit unions, regardless of Debt Protection and/or Credit Insurance provider • The study was conducted in two phases in the spring and fall of 2010; the second was added to increase overall response and make the data more meaningful • In total, 121 out of a possible 749 responses were received, yielding a 16% response rate 4
  • 5. Who Offers Debt Protection? • A total of 20% of respondents currently offer Debt Protection • Nearly half of respondents offering Debt Protection implemented their programs during the past two years, with the highest concentration in 2008 and 2010 • Debt Protection is more prevalent among respondents with larger asset sizes Year Debt Protection Implemented Not Sure 33% 2003 4% 2004 4% 2005 4% 2006 4% 2007 4% 2008 17% 2009 13% 2010 17% 0% 20% 40% 5
  • 6. Debt Protection Protected Loan Types • Loan types most commonly protected within Debt Protection programs are Consumer, Home Equity and Credit Cards Debt Protection Product Types Offered Consumer loans 92% 71% Home equity loans Credit Cards 54% Mortgage loans 13% Other* 4% Commercial loans 0% n. 24; Select all that apply *Other: Vehicles only 0% 20% 40% 60% 80% 100% 6
  • 7. Debt Protection Protected Events • Protected events most commonly offered are Death and Disability, both at 96% and Involuntary Unemployment at 67% • Death and Disability are the most commonly offered protected events across all product types, followed by Involuntary Unemployment, Hospitalization and Family Leave respectively Events Covered by Debt Protection 96% Death 96% Disability Involuntary unemployment 67% Hospitalization 13% Family leave 8% Other* 4% 0% 20% 40% 60% 80% 100% n. 24; Select all that apply 7 *Other: Loan default
  • 8. Debt Protection Influencing Statements • “Protecting credit union assets and “providing members a variety of benefit options” top the list of statements that most influenced the decision to implement a Debt Protection program – “We were offering straight credit life/disability products and decided to offer the debt protection coverage to help our members in involuntary unemployment situations” 8
  • 9. Overall Satisfaction with Debt Protection • Overall Satisfaction with the credit unions’ Debt Protection program is high at 81% (based on the sum of the top two ratings) • “Provider administration services” and “Program design” top the list of Debt Protection program aspects that satisfy the most Overall Satisfaction Percent % Very Satisfied – 7 33 6 48 5 19 4 0 3 0 2 0 Very Dissatisfied – 1 0 Total 100 n. 21 9
  • 10. Debt Protection Program Likes and Dislikes • When asked to identify what respondents particularly like about their Debt Protection program, “Easy to use and offer” and the “ability to tailor the program to best meet their needs” are most commonly mentioned – “Easy to use, claims process is very good” – “That we were able to make the price more affordable for members” – “Our ability to set the parameter and pricing margins for each product” – “We were able to tailor our own pricing and product combinations for the best value for our members” • No common themes are apparent regarding particular dislikes of their Debt Protection program • The few items identified include lack of core processor support, program exclusions and desire to increase penetration 10
  • 11. Debt Protection Program Changes • Most respondents indicated they have NOT made changes to their Debt Protection program since initial implementation • Verbatim comments referred to the addition of incentives, re-pricing and adjusting benefits: – “Incentives are now paid and management’s focus on the program” – “We re-priced some of the plans” – “Increased covered limits” 11
  • 12. Debt Protection Program Experience • 64% of respondents who implemented Percentage Protected Loans Increased a Debt Protection program indicate their Less than 10% 21% 21% protected loan volume has increased 10% - 24% • When asked to indicate by what 21% 25% - 49% percentage, responses range from 36% 50% & Above 1% to 53%; half of the percentages n. 14 reported are from 25% and above • 42% of respondents indicating an increase have had their Debt Protection program in place since 2008 • Of those seeing no change in their protected loan volume, 75% implemented their program in 2010 • Only two respondents indicate a decrease in protected loan volume 12
  • 13. Debt Protection Program Fee Income Experience • 55% of respondents who Percentage Loan Protection Product Fee Income Increased implemented a Debt Protection Less than 10% program indicate their fee income 17% 25% 10% - 24% increased 25% - 49% • When asked by what percentages, 17% 50% - 74% responses ranged from an increase 8% 33% 75% and Above of 3% to 100+%; half of percentages n. 12 reported are from 30% and above • 42% of respondents indicating an increase have had their Debt Protection program in place since 2008 • Of those seeing no change, 75% just implemented their program in 2010 • Only two respondents indicate a decrease in their fee income 13
  • 14. Overall Success with Debt Protection • Overall success with the credit unions’ Debt Protection programs is high at 91% (based on the sum of the top two ratings) Overall Success Percent % Extremely Successful - 4 26 3 65 2 9 Not at all Successful - 1 0 Total 100 n. 23 14
  • 15. Overall Success with Debt Protection (cont.) • Respondents were asked to identify the two most important factors contributing to their credit union’s Debt Protection success • Training programs are mentioned most often, followed by: Debt Protection Success Factors Percent % Training 26 Pricing 18 Variety of coverage 18 Easy 15 n. 17 participants, 34 responses • Respondents cite insufficient staff training and staff’s lack of sales culture as explanations why their Debt Protection Program is less successful 15
  • 16. Overall Success with Debt Protection (cont.) • Factors contributing to success – “Training of staff on how to sell product” – “Ongoing training to reinforce benefits” – “Member affordability” – “Fair cost/benefit” – “Providing a more diverse loan protection product for members” – “Program simplicity” – “Sales incentives” • Factors contributing to less successful programs – “We need to train more staff on how to offer it to our members” – “We do not have a sales culture at the credit union.” 16
  • 17. Peer Recommendations for Debt Protection • When asked what recommendations for success respondents would offer to another credit union considering Debt Protection, common themes include offering staff training and incentives to sell Debt Protection – “Do it now, and make sure you incorporate continual periodic training updates and follow-ups with your staff” – “Train and incent” – “It is a good move to work with their consultant to develop plans their members will buy” – “Determine needs of your member in this economy” – “Partner with a company that can give you the flexibility to tailor the program to your membership” – “Cover unemployment risks” – “Either go all or none in the program. Do not split as we did between 17 credit life and disability and debt [protection].”
  • 18. What to Avoid When Implementing Debt Protection • A question about what to avoid when moving to a Debt Protection program yielded little response; no common themes are apparent – “There’s nothing to avoid, but be careful and do your homework on setting pricing and margins for the products” – “Make sure the data processor can handle another protection program” 18
  • 19. Those with No Debt Protection Program in Place • 52% of those without Reasons Debt Protection Not Pursued Other* 44% a Debt Protection program Too expensive 33% Product complexity 17% in place have considered Technology requirements 15% offering one at their credit Lack of member interest 13% Minimal fee income generation anticipated 11% union Life events covered insufficient 9% Benefit terms inadequate 7% • Among those who did 0% 20% 40% 60% 80% 100% not consider offering Debt n. 54; Select all that apply Protection, explanations include common themes such as lack of awareness/understanding, no interest in product, too expensive and not a priority • Of those who have considered offering Debt Protection the below reasons top the list of why the credit union did not pursue a program (the majority of “Other” responses include themes such as “currently considering” and “not a priority”) 19
  • 20. Reconsidering Debt Protection in the Future • 83% of those without a current Debt Protection program indicate they will reconsider it in the future Will Reconsider Offering Debt Protection Percent % Yes 83 No 17 Total 100 n.96 • 77% of respondents might consider offering a Debt Protection program in the next two years Timeframe Credit Union Might Reconsider Percent Offering Debt Protection % Less than one year 39 1 – 2 years 37.5 3 – 5 years 6 More than 5 years 0 Not sure 17.5 Total 100 n.80 20
  • 21. Reconsidering Debt Protection in the Future (cont) • “Protects credit union assets,” “Provides members a variety of benefit options” and “Generates credit union income” top the list as reasons why respondents will reconsider offering a Debt Protection program in the future – “Periodic review of products to ensure we are offering the best to our members” Reasons for Reconsidering Offering Debt Protection Protects CU assets 78% Provides members variety of benefit options 74% Generates CU income 68% Meets members' needs 64% Flexibility in program design, pricing, marketing 58% Is affordable to members 48% Reduces CU licensing costs 15% Other* 8% n. 80; Select all that apply 0% 20% 40% 60% 80% 100% 21
  • 22. Who Offers Credit Insurance? • A total of 90% of survey respondents offer a Credit Insurance program at their credit union • Some credit unions seem to be offering both Debt Protection and Credit Insurance 22
  • 23. Overall Satisfaction with Credit Insurance • Among those with a Credit Insurance program, overall satisfaction is modest at 45% satisfied (based on the sum of the top two ratings) Overall satisfaction with Credit Percent Insurance Program %** Very Satisfied - 7 14.3 6 30.5 5 27.6 4 17.1 3 6.7 2 2.9 Not at all Satisfied – 1 1 Total 100 Credit Insurance Not Offered n. 12 n.117 **Percentages based only on those with a credit insurance program (n. 105) 23
  • 24. Overall Satisfaction with Credit Insurance (cont) • Respondents rating their satisfaction as a 3, 2, or 1 were asked to expand on why they are not currently satisfied – “Expensive for members” – “It’s not the carrier; it is simply the fact that people today in our credit union are not interested in credit insurance” – “Very little interest from members for simple life/disability” – “Very restrictive and premiums are high. Limited member interest due to price points.” 24
  • 25. Credit Insurance Likes and Dislikes • Ease of selling/administering and member benefit top the list of most commonly mentioned aspects of respondents’ Credit Insurance programs they particularly like – “Easy to understand and administer” – “Meets our membership needs” – “Convenient and relatively inexpensive” – “Protects the credit union, good income” – “Excellent customer services in handling claims” 25
  • 26. Credit Insurance Likes and Dislikes (cont) • Respondents who currently offer Credit Insurance were likewise asked what aspects, if any, they particularly dislike about their program • Among those offering feedback, “doesn’t meet needs,” “challenges with the claims process” and “price” are the most commonly-mentioned aspects they dislike – “Limited in the types of events covered” – “Lack of options” – “Difficult claims process” – “Cost compared to protection” – “Rates are too high” – “Unable to pay incentives to MSRs and Loan Officers since it is an insurance product and they aren’t licensed” – “We don’t make enough money on it” 26 – “We have branches in 3 states, 3 different rates”
  • 27. Key Takeaways • Although only 20% of respondents offer Debt Protection, they are significantly more satisfied and see more success with this program than those who offer only Credit Insurance (81% versus 45%) • More than half of those with Debt Protection in place saw increased protected loan volumes and fee income • According to your peers, Debt Protection program success can be attributed to: – Effective staff training (both in-house and from your provider) and motivating sales incentives – Prudent design and pricing that meets your members’ needs – Offering additional protected events, such as Involuntary Unemployment coverage, to meet member needs 27
  • 28. Key Takeaways (cont) • 83% of credit unions who have considered Debt Protection in the past will consider it again in the future – Strong desire for product education and design/pricing consultation – A Debt Protection needs analysis is essential • Although overall satisfaction with Credit Insurance was low in this survey, it remains a viable product that a majority of credit unions continue to offer 28
  • 29. Thank You • For more information on the survey, please visit our booth in the Preferred Partner Pavilion or http://www.nafcu.org/securian • For more information regarding Debt Protection or Credit Insurance, including client research Securian has conducted in the past: john.gibbons@securian.com 612.234.1018 Follow me @securianjohn 29