Richard T. Guertin is president, agency personal lines, of The Hartford.
Last year, both the Independent Insurance Agents of America and the National Association of Professional Insurance Agents lashed out at The Hartford for striking a deal with Ford Motor Co. in which the insurer will sell auto and other lines of insurance directly to 17 million Ford, Lincoln and Mercury owners and lessees, as well as customers of Ford Credit. The PIA said it was "perplexed" by the Hartford's decision, noting that people tend to trust their professional insurance agent far more than a car salesperson.
The IIAA's rebuke was even stronger. "We are greatly disappointed that The Hartford would set up yet another major program that bypasses--and competes with--its independent agents," said IIAA President Bill Greenwood. "The Hartford has an excellent independent agency force which could have added so much value to this program." He added: "Agents are finding it more and more difficult to understand and operate in a market where they are asked to be partners with their companies one day and competitors to the same companies the next. The emergence of multiple distribution systems among companies is a source of growing concern and frustration to agents."
Ironically, at about the same time all this was going on, the IIAA itself had sent a letter to its members announcing that it had "partnered" with several insurers including Chubb, St. Paul, Redland, Virginia Surety and, by the way, The Hartford to create new products and services for agents to sell. Under the banner of "Big I Markets," also known as the Agent Market Access Program, the partnership will provide IIAA members with online access to a full menu of specialty and niche business coverages endorsed by the IIAA and local Big "I" state associations. According to the IIAA, Big I Markets not only will provide underwriting and coverage information about these products and services but also will offer online quotation requests, sample proposals, rating capabilities and downloadable applications. Products will include specialized monoline products, such as high-valued property, yachts and commercial excess insurance; customized multiline products, such as those designed for banks, municipalities and health care facilities; and new specialized products such as extended warranties.
The irony here is that many, if not all, of these products are usually written through wholesale agents; but the IIAA has apparently struck a deal in which its members can bypass the wholesale agent and write directly with these insurance company markets. Some wholesale agents believe that the IIAA is doing to them what the IIAA says The Hartford is doing to its members.
So where does The Hartford stand vis a vis the independent agency system? We decided to ask.
Richard T. Guertin, The Hartford's president of agency personal lines, acknowledges that the insurer is employing "multiple strategies" in the distribution of its products and services but adds that the strategies include a serious focus on the independent agency system. In fact, he says, The Hartford has spent considerable time and money on products and programs that are intended to benefit independent agents and their customers under the banner of "Investing in Independents."
One of the latest developments in this area was the opening of two offices in Indianapolis to support The Hartford's Midwest agents and policyholders. The company's new claim service center, which opened on December 6 of last year, and an underwriting center, which opened early this year, will create up to 340 jobs in Indianapolis.
The Hartford has established a number of initiatives to increase its agent-produced personal lines business. It has expanded its Omni Insurance Group (nonstandard auto), opened new claims and underwriting offices, and--in response to meetings with agents--has developed new personal lines products.
"This expansion puts us closer to the marketplace with functions that touch our independent agents and policyholders most often and most significantly," says Guertin, adding that this investment is part of an ongoing strategy to help agents grow their business by making products easier for agents to sell and by making it easy to do business with The Hartford. Keith Lyons, a 16-year claims veteran with The Hartford, who was instrumental in shaping the company's Phoenix claim operation, has been named director of the new Indianapolis claim service center. Initially, the center will service policyholders in Indiana, Kansas, Kentucky, Minnesota, Missouri, Nebraska, North Dakota and South Dakota, with plans to add Illinois and Iowa later in 2000. The Hartford also has personal lines claims service centers in Farmington, Connecticut; Tampa, Florida; San Antonio, Texas; and Red Bank, New Jersey.
According to Guertin, the Indianapolis personal lines agency center will provide sales and underwriting support to approximately 600 independent agents in Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, North Dakota, South Dakota and Wisconsin. Indianapolis will join the company's three other regional agency centers, located in Charlotte, North Carolina; Reno, Nevada; and New Hartford, New York, to service approximately 4,300 independent agents countrywide, says Guertin.
These then are areas--claims underwriting and sales--in which Guertin says The Hartford is working with and for independent agents, but what about products?
Listening to agent ideas
"Our program, 'Investing in Independents,' really began about two years ago, and it came out of our meetings with agents groups, our finding out what they wanted and needed," says Guertin. "Then we set about the task of trying to meet those needs. In the new product end, for example, we are offering a home business protection plan that fills the gaps left by homeowners coverage. According to a 1999 study conducted for the Independent Insurance Agents of America (a follow-up of a 1997 study), at least 60% of home businesses were not properly insured. More than 70% of the underinsureds thought they were already covered by their homeowners insurance or didn't know they needed to have additional insurance. Hence our new home business program."
For as little as $250 per year--less than the cost of cable TV--stay-at-home business entrepreneurs can obtain home business coverage that fills the gaps left by their homeowners insurance, says Guertin. Think of it as a super-warranty. "If you spill coffee on your computer, we pay for it. We even cover loss of income as a result of equipment breakdown and will pay for someone to re-key vital information. This is a new product that agents out there recognized a need for--and we listened."
Reducing base rates for auto insureds is another way that Guertin sees The Hartford as being of assistance to independent agents. Recently, the Hartford announced that it had introduced lower rates in Tennessee for a broad range of drivers who have typically paid higher rates for auto insurance. The Hartford has lowered rates in nine categories as part of its long-range strategic effort to expand its customer base beyond the traditional constituency of married home owners with two or more cars and excellent driving records, says Guertin.
"We're looking for responsible risks in new places," he says. "We want to help agents boost their business by offering lower rates to more prospects." Guertin noted that, in the past two years, the Hartford has significantly reduced its base rates in most states and broadened its underwriting guidelines. Also, he said, the company has increased its capacity to serve virtually all types of customers through its purchase of Omni Insurance Group, Inc., a nonstandard auto insurer.
Finally, one area that has agents fearful of losing out to companies who write direct is the Internet. It certainly is true that The Hartford does insurance business over the Internet, but that doesn't necessarily mean that it has written off the independent agent. In fact, at last year's meeting of the IIAA, The Hartford announced that it and Symmetry Technology Labs are developing what could be widely available real-time, agency-company electronic communication.
"The new capability will make agents more competitive as a distribution channel and enable them to more effectively deliver on the important value that they provide to their clients," says Guertin. "The Hartford's systems are capable of instantaneous interactive communication with agency systems," he says.
What does all this mean? Well, what is happening here is that multiple distribution channels for insurers that want to grow in a changing industry environment is a concept that has been accepted. Is The Hartford one of those companies that wishes to grow? Certainly. And other companies are also on the Internet for sales of insurance and forming other alliances that do or do not include agents.
Nevertheless, with The Hartford, there is strong evidence that it remains committed to the independent agency system. "In addition to the things already mentioned, we assist our agents in direct mail campaigns. For agents who want to work with small banks, we provide consulting services. We have more than 20 programs designed just to assist the independent agent. I think that speaks for itself," says Guertin. *
©COPYRIGHT: The Rough Notes Magazine, 2000