RESPs seen as growth area for insurance brokers

If you want to sell an RESP, who do you approach? To many this seems like a dumb question, but the answer is anything but obvious. And it is one question insurance brokers might want to ask themselves if they want to grow their business in the underserved middle market.

If you’re looking for a new sales option, try recommending RESPs to grandparents, says Paul Grimes, senior vice-president sales for Industrial Alliance, speaking at the IFB Spring Summit last week in Toronto. Why? Because grandparents are worried about saving for education, even more than the children’s own parents.

Overall, paying for education is one of the top concerns of seniors (61%) behind worrying about the government’s ability to continue pension programs (81%) and personal fears about having enough squired away for retirement (69%), he says.

RESPs are the best way to market to families and to help insurance brokers get their foot in the door, says Grimes, but it’s not being used enough. Even though Canadians are clearly concerned about their child’s education, only 17% of Ontario households that have children have bought an RESP.

Grandparents have the time to listen to a broker and often have the money to put into an RESP, he says. And borrowing from his own experience, he notes his own parents are more excited to see his kids then they are to see their own son.

“RESPs are the easy sell to the middle market,” he says, because they are easy to understand. Grimes defines the middle market as families with a household income between $25,000 and $100,000. Part of the problem, he says, is people don’t know where to buy them.

“Many brokers have forgotten about the middle market,” he says, which represents about 82% of the population. “Everyone is chasing the 18%.”

The middle market is “vastly underinsured,” he told the audience. Grimes painted a grim picture for the delegates. The number of premiums has been declining 10% a year, he adds, noting that only 8% of Canadians have over $500,000 of insurance coverage and large swaths of the population has no coverage at all, most notably in Manitoba where 34% have no life insurance coverage at all.

But in order to improve sales insurance brokers need to get back to basics. “Stop selling and start advocating,” he says. In his view this means building relationships with clients, educating them and most importantly, simplifying the message.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(06/05/06)