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Marketing The best of both worlds Liberty Mutual's Agency Markets unit teams big-company power with regional focus By Elisabeth Boone, CPCU Why do so many independent agents like doing business with regional carriers? Because, as a group, they’re responsive, stable, and knowledgeable about the markets they serve. In lean years as well as fat years, regional insurers do their utmost to accommodate the agents who rely on them, strengthening the bonds of mutual trust and respect. What if you could marry these desirable traits of regional insurers with the market clout and financial stability of a major national carrier that’s a household name? That’s exactly what happened in 1999 when the Liberty Mutual Group, a leading direct writer and the sixth largest property/casualty insurer in the United States, decided to expand its market reach by creating a distribution channel for the independent agency system. In that year, the insurer launched what was then known as Regional Agency Markets (RAM), which consisted of seven regional carriers plus two specialty companies. (See “National Power, Local Markets” in the September 2004 issue of Rough Notes.) RAM joined Liberty Mutual’s other strategic business units: Personal Markets, Commercial Markets, and Liberty International. By year-end 2004, RAM had grown to the point where it contributed almost 20% of Liberty Mutual’s total revenue of nearly $20 billion. From good to better The launch of Regional Agency Markets clearly established Liberty Mutual as a key player in the independent agency system that was able to offer agents the products of well-known, locally branded regional carriers. Pleased with the success of the new business unit, Liberty Mutual’s management saw a way to expand the scope of RAM to make it an even more attractive and profitable operation. The new approach was the brainchild of Edmund (Ted) Kelly, Liberty Mutual’s chairman, president, and chief executive officer, and Gary Gregg, a Liberty Mutual veteran who had been serving as executive vice president and manager of the Commercial Market strategic business unit. “Ted, Roger Jean (the former president of RAM) and I agreed that it was time to align all of our businesses that deal with independent agents into one group,” Gregg explains. “That included Regional Agency Markets plus Employers Insurance of Wausau and Liberty Mutual Surety.” Gregg was appointed president of the new unit, which is called Liberty Mutual Agency Markets, when Roger Jean retired in 2005. “My career is in a sense a microcosm of our growth and success here at Liberty Mutual,” Gregg observes. “I started out running an insurance division in the early 1990s and then took over what was then called the business market, which was our commercial mid-market direct sales operation. In 1998 I assumed responsibility for Liberty Mutual Surety, which Liberty had purchased from CIGNA in 1994. That was my first exposure to independent agents and brokers. “I led the acquisition of Wausau in 1999,” Gregg continues. “Wausau sells commercial insurance in the middle market through independent agents and brokers, and it has a captive-agent facility as well. In buying Wausau, our strategic thrust was to strengthen our presence in the middle market and to get distribution in the independent agent channel for larger accounts.” After the acquisition of Wausau, Liberty Mutual brought together under Gregg’s leadership all of its commercial lines operations: the direct middle market business that Gregg had run previously; Liberty Mutual Surety; Wausau; Liberty Mutual Property; and its group disability and national accounts operations. Gregg ran the new strategic business unit, called Commercial Markets, until mid-2005 when he was named president of Liberty Mutual Agency Markets. Growing and changing Today the eight regional companies of Liberty Mutual Agency Markets collectively operate in all 50 states (see map on page 48), focusing on personal lines and small to mid-sized commercial accounts. Agency Market’s regional carriers are represented by some 3,500 appointed agencies nationwide which have access to sell the products and services offered by Wausau, Liberty Mutual Surety, and Summit, a Florida-based workers compensation specialty provider. As part of the unification of operations, a decision was made to bring in Liberty Northwest, which had been a separately managed multi-line property/casualty insurer serving the five-state territory of Alaska, Oregon, Washington, Idaho, and Montana. “Because Liberty Northwest was an independently managed company, that left a blank spot on the map for us,” Gregg explains. “It’s now part of our regional company mix, and it’s an important and growing part of our operation. “The reason we changed the name from Regional Agency Markets to Agency Markets is that we now have the base of eight regional companies plus the national capability of Wausau for larger accounts in the middle market and the surety facility, as well as our specialty workers compensation provider, Summit,” Gregg notes. “What hasn’t changed is that our regional companies, which are the backbone of our operation, continue to focus on small and mid-market commercial,” Gregg comments. “Accounts of less than $15,000 in premium are considered small commercial, and our mid-commercial range is $15,000 to $150,000. Wausau is active in the $150,000 to $2.5 million market; it has a national footprint and service capability and can handle multi-location and multi-state risks. Its underwriting, loss prevention, and claims service are organized for those larger accounts,” Gregg says. “The regional companies are focused like a laser on independent agents and their customers on the personal and small to mid-commercial side.” Technology is key By consolidating support functions across the carriers that make up Liberty Mutual Agency Markets, Liberty Mutual is able to offer those carriers big-company advantages. Chief among these is access to a technology platform that is designed to facilitate ease of doing business with agents—Commercial IQ™ and Personal IQ™. Because “ease of doing business” is a tenet of Agency Markets’ value proposition, agents can choose to do business online. On the personal lines side, Personal IQ allows agents to navigate among all the data fields and screens associated with a policy, including hot links between the new business and endorsement workflows. Several real-time functions are available for homeowners, auto, umbrella, and packages: endorsement quoting, submissions, and cancellation requests; policy inquiry search by policy number or policyholder name; access to and display of current, first, prior, and renewal terms’ policy data; current policy data modification capability for endorsement requests; motor vehicle registry report ordering for newly added drivers; and summary of policy transaction history. Real-time services for comparative rating are available through vendors such as SETWrite™, PriorityRate®.com, Transformation Station™, EZLynx™, and TransactNOW™. Agents who write businessowners coverage through Agency Markets insurers have access to Commercial IQ SmartRisk, an underwriting and pricing system that provides up to 100 price points and simplifies eligibility criteria. In September 2006, the eight regional companies were honored by Applied Systems and its client network, ASCnet, for their achievements in advancing interface technology. These Agency Markets companies received the 2006 Interface Leadership and Innovation Award, as well as the “Ease of Doing Business” Silver Award for implementing automation and service advancements for their appointed agents in both personal and commercial lines. What’s more, Peerless Insurance, the Agency Markets carrier that serves nine northeastern states, placed sixth out of 200 property/casualty insurers for providing ease of doing business to its appointed independent agents. The survey, conducted by Deep Customer Connections, Inc., compiled responses from more than 6,000 agents around the country. Carriers were rated on 10 ease of doing business factors, including underwriting, claims service, and carrier-agency relations. Peerless posted a score of 92.7, the highest ranking it has achieved in the four years that the survey has been conducted. Market trends How has the property/casualty market changed in the last few years, and how is Liberty Mutual Agency Markets responding to new and emerging trends? “Looking at recent patterns of change, I see an evolutionary rather than a revolutionary process,” Gregg responds. “I think back to when the pundits said that the Internet was going to disintermediate independent agents, and concern that agents were losing business to vertically integrated carriers on the personal lines side. Despite worries that the independent agency system was under tremendous stress, Gregg points out, “The system continues to successfully evolve, because there are 39,000 entrepreneurs—men and women working with their markets, working with their customers, innovating, and responding to myriad challenges. “Looking at the larger picture, we see some polarization in the marketplace,” Gregg continues. “One of the key trends is the competition between national carriers and regional carriers, and the advantages each brings to the table. What hasn’t changed for us, and won’t change in the future, is that we pursue a unique path in which the core of our operation is our regional carriers plus Wausau, Liberty Mutual Surety, and Summit,” Gregg says. “We’ll continue to go to market with the best characteristics of the regionals—strong relationships with agents, local market knowledge, consistency in the marketplace—and combine those advantages with the power of a national company: the capital base to make investments in technology that can be shared across the carriers, and the ratings and financial strength of the Liberty Mutual Group. “Looking at what’s happening in the marketplace; we’re well positioned to make that mix work and to be successful,” Gregg asserts. * |
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