Douglas C. Ryder, CPCU, is president of Holyoke Mutual Insurance Company. Eileen Gil is vice president, underwriting.
It's not often these days that one hears the phrase "totally committed to the independent agency system." In an insurance industry environment where most insurers are dedicated to the concept of multiple distribution channels, somehow it seems out of fashion to hear those words uttered by an insurance company executive.
But Douglas C. Ryder, president and CEO of the Salem, Massachusetts-based Holyoke Mutual Insurance Company, doesn't believe the phrase is out of fashion at all, at least not at his organization. In fact, Ryder and his associate, Eileen Gil, who is vice president in charge of underwriting for Holyoke Mutual, stress that the insurer does all of its business entirely through independent insurance agencies and will continue to do so.
Says Ryder: "For 157 years, the Holyoke Mutual Insurance Company has been a fixture in the Salem, Massachusetts, community. From this small city, we've established a rich and successful history throughout New England and the Northeast. Currently, our revenues are approximately $70 million, and we have a sound financial position with a surplus of approximately $50 million. Through it all, our most valuable assets have been our relationships with our agents--and the strong feeling of community that comes when our employees and agents work together to provide excellent service."
The Holyoke Mutual Insurance Company first opened for business on May 23, 1843. Its founders chose the company's name as a tribute to Dr. Edward A. Holyoke, one of Salem's most prominent citizens. Dr. Holyoke was born in 1728 and entered Harvard at the age of 14. Soon after graduation, he opened a medical practice from which he served the Salem community for eight decades. "Throughout his 100-year life, Dr. Holyoke understood the value of a strong community and dedicated a great deal of his time to the town he called home," says Gil. "In fact, Dr. Holyoke never traveled more than 50 miles from Salem in his lifetime. His sense of community remains a hallmark of Holyoke Mutual to this day."
Holyoke Mutual writes personal lines automobile insurance, homeowners and commercial coverages for Main Street businesses. The regional insurer provides coverage for some 90,000 insureds in seven states, including all of New England and New York. And how do they do all this business? That's right, exclusively through the independent agency system.
Holyoke Mutual is named for Dr. Edward A. Holyoke who served the Salem, Massachusetts, community in his medical practice for 80 years.
"We have about 200 agencies that range from the smaller Mom and Pop to the larger operations," says Ryder. "We consider ourselves one of the last bastions of the independent agency system. We rely on our agents to give us good, quality business, and we want to establish and continue long-term relationships with them."
While, strategically, Holyoke has focused its activities on the New England states and New York, Massachusetts is by far the company's largest area of operation, with about 70% of its overall business conducted there. Of that 70%, half is in the personal lines auto area. "We've been experiencing difficult times in Massachusetts in recent years because of a rigid regulatory environment, but we're staying with the marketplace," says Ryder. "What we are looking at is, over a period of a few years, reducing that 70% of overall book of business in Massachusetts to about 50% and expanding more into other New England states. But that doesn't mean that we will not be signing on new agencies in Massachusetts. Quite the contrary. Our commitment to the state and the agency system is strong."
It's a dicey situation, though. Personal auto insurance rates in Massachusetts are dictated by the insurance commissioner and, in the last four years, the rates have decreased about 18%, says Ryder. "We pride ourselves on being able to underwrite our personal lines auto product reasonably and profitably, but with the current regulatory environment all insurers operating in the state are being forced into one main stream," says Ryder. "It's become a political football and the insurance buying public hasn't got a handle on the need for insurance company profitability. But there are still opportunities here, especially because there is little competition coming from direct writers. The direct writers don't like the highly regulated market, the residual market or the stiff penalties for withdrawing from the market. That's where we see our strength," says Ryder. "We've been here for 157 years and we intend to stay in Massachusetts and to expand our operations into other New England states."
Doug Ryder is proud of Holyoke's 157-year history, and he continues to advocate long-term agency-company relationships.
Another factor that makes Massachusetts a unique state in terms of automobile insurance is its residual market mechanism, Commonwealth Automobile Reinsurers (CAR). What makes CAR different from other states is that every driver in the pool with the same driving record pays the same rates. Insurers can keep business out of CAR or reinsure it into the pool, depending upon how the insurer views the insureds' performance. "This year, about 10% of the auto market may be ceded to CAR," says Ryder. "In the past, it has been as high as 35% or 40%, but it began to come down. Now, because of the current regulatory environment and the clampdown on rates, the percentage is going up again. CAR is a very valuable mechanism in Massachusetts, but a volatile one nonetheless."
One significant strategic move on the part of Holyoke in recent years has been to reduce its vulnerability to catastrophe exposures. "There was a time," says Ryder, "when Holyoke began an expansion program down the entire East Coast reaching to Florida. We began to pull back in the early 1950s, however; and in 1992 when Hurricane Andrew struck, we decided to retrench back to our core states of New England and New York.
Another recent strategic move on the part of Holyoke is its alliance with the Country Companies Group, based in Bloomington, Illinois. "This alliance brought us an A+ rating from Best's," says Ryder. "up from A-. It is a pooling arrangement, which allows us more flexibility in terms of business opportunities. We remain a regional carrier, which is what we are and what we intend to stay; but it gives a tremendous depth of people to call upon when we need them, and that will help us further our expansion plans."
A replica of an early fire wagon serves as a reminder of Holyoke's past. Looking to the future, Eileen Gil stresses the need for agents to embrace technology.
But Ryder and Gil emphasize that Holyoke's real strength lies in its relationship with its agents. "We had an independent firm conduct a survey of our agents to see how we're doing," says Gil. "In terms of agency relationships, 88% of agents deemed us equal to or better than our competitors. In terms our claims services, 95% said we were equal to or better than our competitors. We feel good about that."
Ryder feels particularly proud of Holyoke's reputation with its agency force in light of the fact that independent agents are under a great deal of pressure today. He recognizes that, not only are companies employing multiple distribution channels, which forces agents to compete within their own sector; but the breakdown in barriers between banks, securities firms and insurers also creates competition for agents from the new players.
Asked how independent agents, the marketing lifeblood of Holyoke, can possibly survive in such a chaotic environment, Ryder says: "It's up to the agent to do what he or she does best and can only do best, and that is provide the personalized service not available from alternative distribution systems. The key words for the agent should be 'value added.' It may just be a phone call to a client to see if the client's situation has changed and a policy needs to be updated. The personal touch means a great deal more to people than many think. It's not only price that matters. But if the client only hears from the agent when bill time comes around, that just won't cut it."
Gil goes further than that. "There's no question about the fact that the personalized services an agent offers an insured is invaluable. But in today's business environment, agents have to keep up with technological advances. We have an automation program that assists our agents in providing faster service to their clients, in terms of questions, quotes, and in terms of claims. Agents should embrace the new technologies to be able to provide the value-added services any way the client wants them," she says. *
For further information:
Holyoke Mutual Insurance Company
Web site: www.holyokemutual.com
Phone: (978) 744-6123