How 4 Credit Unions Achieved Member Insurance And Investment Success

Credit unions on both coasts share how they ramped up new insurance and investment services.

Prolonged low interest rates, shrinking interchange income, and growing pressure from non-financial institution competitors has credit unions seeking new revenue sources.

For many, that’s insurance and investment services. In fact, the NCUA says 119 credit unions have added one or both just in the past two years. A review of the list shows those credit unions include institutions large and small.

State Employees’ Credit Union in North Carolina, Nutmeg State Financial Credit Union in Connecticut, USC Credit Union in California, and Peninsula Community Federal Credit Union in Washington state use different business models from scratch to turnkey and each has developed its own proven marketing methods. Yet all four institutions view insurance and investment services as a way to deepen the member relationship.

Here, the four credit unions reveal how they chose their paths and how the new product suite influences the bottom line.

Peninsula Commits To CUSO

Jim Morrell, president and CEO at Peninsula Community Federal Credit Union ($157.9M, Shelton, WA), cited member need, steady income, and ALM as primary reasons his credit union added investment services two years ago.


data as of 3.31.15

  • HQ: Shelton, WA
  • ASSETS: $157.9M
  • MEMBERS: 17,714
  • 12-MO SHARE GROWTH: 6.20%
  • 12-MO LOAN GROWTH: 9.27%
  • ROA: 0.27%

We determined our members needed it, Morrell says. It was an opportunity to generate non-interest income. And it’s one more tool in our kit for asset-liability management.

The credit union launched Peninsula Wealth Management Services in April 2013 in what Morrell calls a relatively turnkey arrangement with CUSO Financial Services in San Diego. In 25 months, the credit union has drawn $15 million in invested funds from 189 households and has generated a little more than $100,000 in net income.

The agency’s in-house financial advisor is a longtime local wealth manager. CUSO Financial in close consultation with Morrell and his team hired and manage the advisor, but he solely serves all five credit union branches.

CUSO Financial also is responsible for another area that is outside a typical credit union’s wheelhouse: complying with investor regulations, including the financial industry regulatory authority.

We just didn’t have anybody in-house with the experience to do all these management functions, Morrell says.

4 Tips For Newcomers

Thinking about adding investment or insurance services? Here are some things to keep in mind:

  1. There are different arrangements to consider, ranging from total turnkey to your credit union owning the whole thing, and staff doing the selling and servicing. By far, most credit unions outsource to differing extents.
  2. Members will assume the companies you choose to partner with are as trustworthy as you. Due diligence is critical.
  3. Front-line staff needs to understand the products in order to effectively refer or sell them.
  4. Compliance for insurance and investment products differ from NCUA rules and regulations. They all need to be considered

Peninsula Community’s front-line staff, however, is still responsible for meeting certain rules, such as not putting a Peninsula Wealth Management sign next to the NCUA signs about insured accounts. Front-line staff is also responsible for referrals but not much else.

We don’t want a 22-year-old teller taking trade orders, and they can’t anyway, Morrell says.

Morrell is responsible for the CUSO Financial relationship, and he relies on his vice president of marketing and assistant vice president of operations whom he calls the other two legs of our three-legged stool for administrative support.

Peninsula Wealth Management’s ultimate success also rests on the quality and tone of the service the members get from CUSO Financial Services and the advisor.

It’s like our other established third-party relationships including shared branching and insurance, Morrell says. Our members will have assumed we’ve done our due diligence, and for regulatory and reputational purposes alike, it’s incumbent on us to ensure these are quality services.

As for advice to others considering a similar venture, Morrell says senior management must support and promote the program. He also says the credit union must have a good understanding of the third-party relationship.

There are a lot of things you have to keep in mind, Morrell says. For instance, a lot of financial advisors get to take their book of business with them if they leave. If ours does, the credit union retains the book of business. That’s important to us and to our members.

Nutmeg State’s Turnkey Alignment

Nutmeg State Financial Credit Union ($379.9M, Rocky Hill, CT) has been averaging 20 new policies a month sold since last August, when it began offering personal lines through a turnkey relationship with a Connecticut-based provider of outsourced insurance solutions to dozens of credit unions across the nation.


data as of 3.31.15

  • HQ: Rocky Hill, CT
  • ASSETS: $379.9M
  • MEMBERS: 35,656
  • BRANCHES: 10
  • 12-MO SHARE GROWTH: 3.87%
  • 12-MO LOAN GROWTH: 9.18%
  • ROA: 0.40%

Insuritas provides the agency and what it calls an insurance aisle for its client websites, provides marketing support, and manages the relationship after the sale. Like other credit unions, Nutmeg State works to bundle insurance with loans and offers policies for everything from snowmobiles to workers’ comp.

Odds are, if it has wheels and needs keys, we can get it insured, says Dana Clark, Nutmeg State’s vice president of retail service deliveries, adding that auto and homeowner policies have been the most popular.

The credit union builds insurance products into its goals, incentive plans, and training programs. In fact, it asks trainees to obtain a quote themselves so they can help a member walk through it.

Marketing appears on the website and in branches, and call center and retail teams also talk up the offering. The credit union even has special blitz days that Clark says focus on encouraging members to get a quote.

We then funnel the leads centrally to the experts by connecting the member directly to an agent on the phone, via chat, or through the website, Clark says.

Streamlining the process is critical. That initial call gathers only the most important information and typically takes only five to seven minutes.

This keeps members from disengaging because the process is too cumbersome, Clark says.

My advice would be to listen and collaborate with the experts you partner with. They should be able to provide your roadmap to success. Then continuously re-evaluate your program to replicate what is working well and driving results.

Indeed, how third-party vendors handle customers can be a sore spot in insurance, card services, or anything else.

I’ve heard many times from other executives who have been frustrated with the lack of control over the member experience, Clark says. This may simply be attributed to differences in what that experience should look like. There are a lot of options out there, and it’s important to be sure your corporate vision and strategies align with whomever you contract with in order for the partnership to be effective.

Aside from third-party matters, Clark says credit unions must also commit enough internal resources and be patient while the portfolio builds.

Listen and collaborate with the experts you partner with, she says. They should be able to provide a roadmap to success. Then continuously re-evaluate your program to replicate what is working well and driving results.

Next: Self-Sufficient Life At SECU

Self-Sufficient Life At SECU

State Employees’ Credit Union ($30.5B, Raleigh, NC) has been offering life insurance in an agency capacity since 2001 but created its own state-licensed life insurance company in 2013.

Why the switch?

We wanted the ability to build straightforward insurance products and deliver them in a more convenient and efficient way, says Stacey Waddell, senior vice president of member insurance services.

SECU Life a wholly owned subsidiary of the nation’s second-largest credit union now underwrites the whole life and term policies.


data as of 3.31.15

  • HQ: Raleigh, NC
  • ASSETS: $30.5B
  • MEMBERS: 1,979,195
  • BRANCHES: 254
  • 12-MO SHARE GROWTH: 7.32%
  • 12-MO LOAN GROWTH: 11.41%
  • ROA: 0.56%

Overall, SECU increased insurance production by 66% in the past year. SECU Life’s growth largely drove that, Waddell says. SECU Life currently provides coverage to more than 260,000 of the credit union’s nearly 2 million members through individual and group policies. Another 18,000 policies are in force through third-party carriers, including home, auto, and health insurance.

The insurance business at SECU is a group affair spread among the big credit union’s network of more than 250 branches and contact centers.

We have nearly 2,000 licensed agents across North Carolina who are available to discuss insurance planning and products with members, Waddell says. These agents hold varied positions in the branch, from tellers to branch managers and every role in between.

That means nearly 40% of the 5,200 SECU employees are involved. Why the commitment?

We want our members to view us as their primary financial institution, Waddell says. In order to have that honor, we need to offer an array of low-cost products and services that our members need. Insurance is no exception.

Trojans’ Credit Union Relies On Firefighters

As president and CEO of USC Credit Union ($412.8M, Los Angeles, CA), Gary Perez is a big fan of the Trojans. He’s also big into deepening that affiliation its students, staff, and alumni feel with their storied institution and its credit union.


USCCredit Union
data as of 3.31.15

  • HQ: Los Angeles, CA
  • ASSETS: $412.8M
  • MEMBERS: 64,808
  • 12-MO SHARE GROWTH: 5.66%
  • 12-MO LOAN GROWTH: 14.85%
  • ROA: 0.74%

Three years ago, USCCU began offering auto, homeowners, earthquake, fire, business, and other lines to its members through what Perez calls a turnkey referral arrangement with Firefighter Insurance Services, a wholly owned agency of Firefighters First Credit Union.

So far, Trojan Insurance Services has sold 1,426 policies worth $1.45 million, Perez says.

It generated $8,678.66 in non-interest income in its first fiscal year. That grew to $26,992.49 a year later, and this year Perez projects 60% growth to $43,438.47. By year five, he expects that figure to exceed $110,000.

Firefighters and its lineup of well-known insurance companies provide the services after the sale, and so far, costs have primarily been the $71,869.62 paid in commission to the agent, as well as approximately $2,000 for marketing and minimal expenses for hosting the agent in our branches, Perez says.

Quotes are available online, and the credit union markets and sells insurance online, over the phone, and by email. Football season is an especially good time for marketing campaigns, Perez says, but the whole team at USCCU contributes year-round.

Our front-line staff cross-sells products and provides referrals, and our branch managers coach staff to ensure they each meet their minimum of 10 referrals a month, Perez says. Our agent conducts monthly sales meetings as well as trains and sells.

Perez says the income is helping to replace a big hole left in his balance sheet when federal student lending programs were eliminated. Just as important, it is helping to build value for members.

We see offering insurance along with our automobile and home loans, for instance, as a way to better position ourselves as trusted advisors, he says. That adds value to the relationship.

More On Investments And Insurance

  • 3 Investment Strategies For 3 Life Stages
  • How Firefighters First Credit Union Plans To Hit $1 Million In Net Income
  • 3 Tips To Strengthen Member Insurance Services
May 15, 2017

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