Healthcare Industry Changes Unveil Hidden Profits
When it comes striking a balance between providing members with products and services to outshine the competition and keeping income coffers stocked, some credit unions are teetering on a tightrope to make it happen.
Consumers are wary of hidden charges but they’re likely to pay for services that bring value to their lives, said Jan Southern, a senior consultant with John M. Floyd & Associates, a Baytown, Texas-based profitability and performance improvement consulting firm.
“By providing transparent communication and education regarding eligibility, appropriate program usage and repayment policies, you can strengthen the relationship you have with existing members, Southern offered. “Plus, you can avoid regulatory concerns while earning the noninterest income you need to reach your performance goals.”
With health care insurance on the radar lately as the Affordable Care Act’s healthcare.gov made its debut last fall, some credit unions are looking for ways to help members navigate within this new federal mandate.
“The health insurance industry is in a state of flux as many parts of the Affordable Care Act come into effect, including insurance exchanges, which allow consumers to comparison shop for health care coverage,” said David VanAmburg, director of the American Consumer Satisfaction Index. “The customer satisfaction gains this year may be driven in part by expected price competition as health insurance companies anticipate the effects of the new online marketplace.
Partly as a way to boost noninterest income and to offer an alternative to members, credit unions are branching out in health insurance space. Since announcing their alliance with CoOportunity Health last June, the Iowa and Nebraska Credit Union Leagues have been training and educating credit unions about what the Patient Protection and ACA means for members.
Between the two states, 45 credit unions have signed on with CoOportunity Health, a Des Moines, Iowa-based cooperative that offers insurance options through broker Group Benefits Ltd., in Urbandale, Iowa
Last summer, the Pennsylvania Credit Union Association linked up with Digital Benefit Advisors, the largest division of the Atlanta-based Digital Insurance, for the state’s credit unions to have access to a broader variety of carriers and resources.
In 2013, data system and technology solutions provider EPL Inc., in Birmingham, Ala., launched the Credit Union Exchange Blueprint, a private exchange for credit unions and members that provides online access to carriers and a resource for new requirements.
For credit unions that are considering offering life and property and casualty insurance, smaller providers may be more aligned with the member service levels that are traditionally touted. According to the ACSI, a surge in customer satisfaction for smaller insurance carriers has helped moved them ahead of bigger firms.
Like smaller banks and credit unions, smaller insurers benefit from more personalized attention and P&C insurance insurers provide a high level of customer service including courteous and helpful staff, when it comes to policy purchases and renewals or questions about insurance and claims handling, the ACSI discovered.
Southern said by combining compliant products with great service, credit unions can stand out by providing members with the access they need to manage their finances, such as an overdraft privilege program. Doing so can also impact other areas.
“Train your staff to cross-sell peripheral products that result in increased revenues,” Southern suggested. “Financial services representatives who can provide members with access to multiple services, such as opening new accounts and taking loan applications, provide convenience and are part of a more cost-effective operating strategy for the institution.”
Even as insurance can be a viable channel to grow noninterest income, like and product or service, credit unions with existing programs may need to evaluate whether they’re worth the effort. Southern said if a product was initially introduced as a growth loss leader and it has become saturated, it may be time to drop it from the lineup. Likewise, looking beyond traditional revenue streams to services such as mobile banking is another way to turn up the revenue geyser.