TD Insurance has found the turbo engine for critical insurance sales: mortgage insurance. A comfortable fit for banks, this niche has taken TD to the pole position in the Canadian critical illness insurance (CI) market in the last decade.
Interviewed by The Insurance Journal, president and CEO of TD Life Group Sean Kilburn divulged the banks’ CI sales figures that leave rivals in their dust. Systematically offered to
TD Bank mortgage loan and line of credit applicants, the product manufactured by TD Insurance, a subsidiary of TD Life Group, has been highly successful. "In a typical year, we will sell 200,000 policies," Mr. Kilburn notes. By comparison, insurance companies’ distribution network sold nearly 85,000 individual critical illness insurance policies in 2005, LIMRA International reports.
New premium sales of the TD Insurance product have grown by 14% to 15% per year in the past decade, Mr. Kilburn continues.
TD Insurance’s huge advantage: banking customers. "We have 10 million customers at TD Bank and 2 million with life insurance. I’d say that between half to three quarters of them opted for CI coverage, which means 500,000 to 750,000," he points out.
The product’s affordability is another strong selling point. For an average monthly premium of $25 to $30, TD Insurance CI holders get insurance coverage ranging from $100,000 to $130,000, on average.
"We have more than $100 million of premiums under management year-to date," Mr. Kilburn adds.
Targeting the middle class
What is the secret to TD Insurance’s success? "We’re targeting the middle income, underserved market, and focussing on affordable, easy to buy, easy to understand products. In targeting the high net worth clients, financial advisors are leaving us a lot of room," Mr. Kilburn remarks.
With just a few questions, TD can screen potential CI clients and either issue the insurance immediately or take the selection process further.
Designed by TD Insurance, a subsidiary of TD Life Group, the product is distributed directly to bank customers, often by telephone.
The company’s slogan is simple: "Protect what’s important." First, TD Insurance limits the product to the three key conditions that account for over 90% of all critical illness claims in Canada: cancer, heart attack and stroke. "Every Canadian can relate to a friend or a family member who got one of those illnesses." Mr. Kilburn explains.
Premiums are set on a collective basis (per five-year age bracket in mortgage insurance).
For example, a couple in their mid 30s that contract a $100,000 mortgage loan from TD Bank can receive joint critical illness insurance coverage for a monthly premium of slightly less than $30 per month. A 15% discount is offered when more than one customer is insured.
However, like all banking insurance tied to a loan, the CI insurance is terminated if the customers change institutions.
Mr. Kilburn is a U.K. expatriate who honed his CI skills in England, where he helped launch the country’s second critical illness product in 1990.
Products offered in the U.K. tend to be priced on a collective basis and generally cover credit. "When I came to Canada, it was natural to offer that kind of product, but in simplifying it even more."