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GRIFFIN ASSURANCE
COMPANY LIMITED |
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{MARTINS Bank Trust Company have
taken over the Griffin Assurance Company, a subsidiary of London and
Edinburgh Life Insurance Company. Griffin issue life assurance contracts in
the group now managed by Martins Unicorn.
The Purchase price has not been revealed.} Something
else that is not immediately revealed, is the speed with which Martins Bank
Trust Company wants to completely take over Griffin Assurance, revamp its
products AND its workforce. The following text is taken from an
extensive internal memo from Martins Bank Trust Company revealing some
interesting thoughts on sales techniques, many of which would become standard
across all banks in the 1980s and 90s, and, sadly, some of which might be of
the kind that led to some of the more unsavoury aspects of hard-selling that
dogged the banking industry in Britain towards the end of the twentieth
century… Newspaper Text © Reach PLC and Find my Past
created courtesy of THE BRITISH LIBRARY BOARD.
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The following memorandum is
produced in order to assist in clarifying our ideas at the time of Griffin
Assurance Company Limited, being taken over by Martins Bank Trust Company
Limited. Griffin's objective must be
to sell as many policies as is possible. Competition in this field is
severe. To achieve our objective: 1.
The policies must be as attractive as possible. 2. They must be sold HARD. To be attractive, policies must
have three factors as described below. a. Competitive Premiums: Considerations for
competitive premiums must include the following: (i) There must be a
high percentage of the premiums invested and this implies that the expenses portion
of the premium must be kept as low
as possible. At present our rates are reasonably good. (ii) Nevertheless,
the premium rates must allow for sufficient commission and renewal
commissions to be paid to Brokers and salesmen, which
our current premiums do not do. (iii) Economical
administration is essential. With Griffin this is largely obtained through computerisation.
The present staff of four are dealing
with up to 140 policies a month. Future production should, however, Be at
least four times this and some addition to the
staff will be necessary. Careful investigation will be made to see whether
any further economies can be achieved. (iv) It is possible
that a new reinsurance treaty might reduce the mortality premium, and
underwriting procedures may have to be reviewed. It is intended to amend the proposal form after discussion
with reinsurers. We wish to continue our policy of not pursuing medical
evidence at present in the interests of simplicity and keeping down expenses. b. Good Unit Trusts The Unit Trust investment is
of overriding importance. Good past and current results can unquestionably make
a vast difference to the selling of U.G.A.S.P. c. Good Benefits
The benefits of our policy at present are not as flexible as those of
some of our competitors, but after discussion with the reinsurers it is hoped
to incorporate new additional
benefits as follows:
(i) Double life cover.
(ii) A higher maximum cover
which should be, at least, £10,000.
(iii) Family income benefit. From the reinsurance proposals put
forward by Messrs. Duncan C. Fraser & Company it seems that (i) and (ii)
can be achieved quite simply. It would also be advantageous if we could
include Personal Accident benefit and waiver of premium benefit, but these are
somewhat more controversial and expensive and can be held over at present. A
further point on the same lines adding very considerably to the saleability
of Griffin policies, would be an assurance from as many Building Societies as
possible that they would accept Griffin policies as security for a mortgage.
Our efforts in this direction have not so far met with much success, but
policies have been accepted by the Co-operative Permanent and the Burnley
Building Societies. SELLING Three methods of selling are open
to us:
(a) By advertisements incorporating a proposal form.
(b) Through Bank branches.
(c) By a sales force. While there are still many people
who will complete a proposal for life assurance if they see the right
advertisement at the right time, this can be an expensive method of obtaining business and can lead to a somewhat
excessive proportion of surrenders, partly due to policyholders who may not
have fully understood what they are doing. Currently an advertising campaign
is being tried in the national press. The
better alternative is by selling face to face. The Bank branches can be
invaluable in this context. They do, however, suffer from the limitation that
they cannot go out and find business but must wait for it to come to them. Our
own sales force can, however, call not only on those from whom we have
received enquiries, but also to some extent on members of the public who
might otherwise never know of unit linked policies. Some of our competitors’
salesmen, notably those of Save and Prosper, do call on members of the public
(without prior introduction, and our own. sales force spend about 25% of
their time on this type of business. The business they produce is likely to
be (and in our experience has so far proved to be) of better quality, both in
age, duration and monthly premiums. There is also likely to be a considerably
lower surrender rate. Considerations for dealing with the sales force are
attached as an appendix. Unlike
selling Unit Trust shares, it is not possible to see an immediate return for
the outlay. It is probable that the average selling costs for a Griffin
policy must amount to 3% to 4% of the sum assured, but the full earnings for
the Group do not appear until the policy matures and all the money has been
invested some 18 years later. Nevertheless, assuming that the expense rates
in new premiums to be calculated are increased, the initial selling expense
should have been recouped within six years, and maybe sooner. It seems right that advertising and other
promotional costs should be borne by Martins Unicorn, and indeed any other expenses,
such as, part cost of the sales force, which the gross profits of Griffin are
unable to cover. APPENDIX SALES FORCE A
start was made to build up a sales force with the engagement of a Sales
Manager in January 1967. Recruiting has proved somewhat difficult and by the
end of that year we had achieved four satisfactory salesmen. In the first two
months of 1968, a further four salesmen have been engaged, all of whom are
proving to be good men. It is planned to engage a further four salesmen to
start on 1st April, June, August, October and November, thus bringing the total
to about 30 by the end of this year. All the salesmen are given a week’s
course at Unicorn House. Subsequently the Sales Manager continues his
training of them in the field. The target for each salesman is to write
£8,333 worth of Assurance per month. In January 1968 a total of £57,700 was written
(six salesmen) and in February, £42,500 (eight salesmen). A projection for the
expense of the operation extending the number of salesmen to 28 in the
current year shows that by December 1968 the total cost will have been
£26,000. During the same period £6,000 will have been retained by the Company
out of commission earned by the salesmen. In 1969 a further £8,000 of
commission is due to be retained by the Company from the salesmen’s 1968
sales, while the income from the initial service charge on the Unit Trust
shares bought for the policies sold in 1968 is estimated at an average of £1,400
per annum for the next 20 years. Thus by the time that those policies sold in
1968 mature (after making allowances for surrenders, claims, etc.) the whole operation
show a profit of some £16,000. All the
above figures are based on a conservative estimate of attaining average sales
of just under £6,000 per month per salesman. Thus when the salesmen reach and
pass their target of £8,333 Per month, the actual profit will be higher than
that estimated. It is only the establishment and expansion of the sales force
which is expensive. In subsequent years the company should make an annual
profit on their efforts. |
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