With the cost of auto insurance on the rise, credit unions could have an clear opportunity to grow non-interest income streams while simultaneously deepening relationships with members.
Many institutions offer insurance as an ancillary product to serve members and drive non-interest income. The price of insurance has more than doubled in comparison to the cost of a car over the last two decades. With many consumers’ pocketbooks feeling the pinch from inflation, there are signs that some drivers are letting their coverage lapse as premiums rise.
CommunityAmerica Credit Union ($5.4B, Lenexa, KS) has offered personal lines of insurance – including homeowners, auto, and more – since it launched the CommunityAmerica Insurance Agency in 2018. That division was partly the result of board members and the management team literally playing the board game “Life” in a strategic planning session as a way to spot opportunities to help members. Insurance was deemed to be an area where there was a gap, and the agency was built from scratch shortly after.
Personal insurance lines make up about 90% of the agency’s book of business, explains Scott Strickland, president of the CommunityAmerica Insurance Agency, nearly evenly split between home and auto. Only about 1% of the credit union’s 336,000 members are currently insured through the agency, but that figure is growing as CommunityAmerica’s member base expands. Membership was up by more than 8% as of year-end, and Strickland says the cooperative is positioned for further growth in the years ahead.
“Two to five years ago there was a lot of growth in the insurance market as a whole; the last two years, that market has hardened, which means insurance carriers are raising their rates and underwriting gets tighter,” he explains. “While we have leveled off a little bit, we are still positive and we’re still growing. What we expect is that as the carriers start to become profitable again – they haven’t been since late 2023 and a lot of 2024 – that market is going to soften and our trajectory will take off again.”
CommunityAmerica has its own independent agency, but many credit unions offer personal insurance lines through partnerships with vendors such as TruStage, State National, and SWBC. Those services deepen the relationship with members but also bring in vital non-interest income streams.
‘An All-In Approach’
CommunityAmerica takes a low-pressure approach to insurance, focusing on members’ needs and how the credit union can meet those.
“It’s not about aggressive sales tactics or flashy promotions,” says Strickland. “We’re here when our members need us — whether it’s buying a home, financing a car, or protecting their family’s future. These life moments create natural opportunities to help.”
Loan officers and branch and contact center staff raise the topic with members when relevant, but it’s not a high-pressure sales approach. Rather, says Strickland, “It’s an all-in approach to make sure we’re letting members know we’re here to help.” Staff from the agency also reach out 60 days before renewals to review the current policy and explore other opportunities.
The credit union and its agency partner with well-known carriers like Travelers, Safeco, Nationwide, and Progressive, both because those are trusted providers, but also because they have a history of being responsive when members needs to file a claim.
“It’s not about aggressive sales tactics or flashy promotions…These life moments create natural opportunities to help.”
“Where the rubber meets the meets the road is when you’re sitting on the side of the road with an accident – is Travelers or Safeco going to be there when you need them?” says Strickland.
As the market has hardened over the last 18 months and consumers’ budgets have tightened, Strickland says much of the agency’s role has been around education. That means not only ensuring members understand the importance of on-time payments but helping them understand during the renewal process why rates may have risen.
“Carriers are much more likely to drop someone today than they were five or even 20 years ago, so you have to be a good insurance consumer,” says Strickland. But, he adds, that’s where a personal touch really makes an impact. “We can develop blogs and marketing pieces to educate people, and we do. We can have seminars and those kinds of things, but it’s that one-on-one connection between our agent and that member that is most important.”
Strickland added that connecting with various insurance trade groups can be an invaluable resource for credit unions entering this space and particularly for those considering launching an agency.
“A credit union forming an agency is entering a new business line and connecting with other professionals in the line of business can make you stronger,” he says. “The same way that credit unions tend to be collaborative with one another, its important to extend and seek that collaboration in this new endeavor.”
Let The Member Determine The Value
Not every credit union offers personal lines of insurance, though many provide services like gap and debt protection or collateral protection insurance – all designed to protect members in the event of bad luck or catastrophe.
Seven Seventeen Credit Union ($1.7B, Warren, OH) has offered gap and debt protection insurance for well over a decade, according to Daniel Harp, senior vice president of lending. Non-interest income from insurance brought in more than $800,000 during 2024. Product penetration has remained fairly steady, and those products represent only a small percentage of Seven Seventeen’s overall NII, but Harp notes that the revenue they bring in increases as the loan portfolio grows.
Frontline staff are trained to understand how those products work and whether they could benefit members, but the emphasis isn’t on sales. “Sales is a negative word in our operation – we inform the consumer,” says Harp. “Once it’s explained and we’re not pushing it, some say ‘Why don’t we move on?’ but they take it as good advice. Sometimes they’ll wait a day or two and come back with more questions before the loan closes. We tell them where they sit, what the value is if something happens, and it’s their choice.”
Good Product, Good Price
Rogue Credit Union ($3.6B, Medford, OR) takes a similar approach, and gap and debt protection insurance have 49.7% and 27.4% penetration rates with the membership, respectively. The Oregon-based cooperative focuses on a profit strategy defined by value adds that are mutually beneficial for all parties.
“Gap is a very inexpensive product for the value that it brings to the member,” says Rob Overton, senior vice president of consumer and mortgage lending. “It brings Rogue non-interest income and it brings great value to the members. That’s a marriage, in my mind, of a good profit.”
We measure success in this space not by the close of the sale but by whether members understand what we’ve presented, and we let them make the decision .
Rogue has intentionally leaned into these products, and has lately been successful in adding it to nearly 40% of eligible deals. Over the course of the last year, adds Overton, there’s been a distinct push to ensure members understand the value of those products, but to present them in a way where members make the final decision without a hard sell.
“We measure success in this space not by the close of the sale but by whether members understand what we’ve presented, and we let them make the decision,” says Overton. “Not everybody wants gap and not everybody thinks it’s worth the $300 or $400 over the life of the loan. That’s not our decision to make…We don’t push people into it, we just present it.”
While Rogue recently rolled out a warranty program for auto loans and is exploring offering some P&C lines, nothing else is currently on the horizon. No matter the product, says Overton, the focus remains providing a value at an affordable price without overly burdening the member with fees.
“It’s fine to make a little bit on every deal – you don’t need to retire from just one deal,” says Overton.
What’s Your NII Strategy?
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