By Phil Zinkewicz
Meryl Groudan is vice president of Gulf Insurance Group's newest "child," Gulf Marketing Services of Wilmington, Delaware; and H. Scott Fritts, executive vice president of Gulf, is GMS's president.
It was just this past January that the Gulf Insurance Group announced to the insurance world that it had experienced a "blessed event" of sorts. It was a "new member of the family," according to a letter sent by Scott Fritts, executive vice president of Gulf Insurance Group and president of this new entity. The new member was aptly named Gulf Marketing Services, Inc., and its home is in Wilmington, Delaware. Although only months old, the new family member has a promising future, judging by its lineage. Gulf Marketing Services (GMS) is owned by Gulf Insurance Group, which is in turn owned by Travelers, which is owned by Citigroup. A proud heritage indeed.
Why a new company in such a large family of companies? Gulf Insurance Group is one of the largest writers of specialty coverage in the United States. In many lines of business with large policy count, Gulf Insurance Group relies on the expertise of program managers and wholesalers. However, in the management liability area, submissions have always been made directly to Gulf Insurance Group. "At Gulf, we looked at all segments of our operation and determined that management liability products for the small to midsize company were particular areas in which we wanted to grow," says Fritts. "The direct handling of this so-called "volume business" was not really Gulf Insurance Group's strong suit, so we embarked upon a new approach. We decided to create GMS specifically to target the small and medium-sized accounts in these areas.
"One of our existing program managers was using a number of automated systems that helped us grow our employment practices liability book. We exported these technologies and built new ones to foster growth in our management liability lines," he adds.
Scott Fritts believes that Gulf's relationship with Travelers and its more than 5,500 agents provides a natural advantage for GMS to draw upon.
--Scott Fritts
A great deal is expected of this fledgling operation. It is hoped that with the assistance of agents and brokers, GMS will capture a significant share of the small-to-medium-sized management liability market. The GMS product portfolio will initially consist of four lines: private company D&O liability insurance, D&O for the not-for-profit sector, fiduciary liability insurance for ERISA plan administrators, and employment practices liability.
Regarding distribution, Fritts says that Gulf's relationship with Travelers provides a natural advantage for GMS to draw upon. "There are more than 5,500 Travelers agents, people who are successfully doing business at the Travelers level," he says. "We looked at the year 1995 and determined that, at that time, about 2% of Gulf Group's business was coming from Travelers agents. By year 2000, that figure had risen to 16%. We realized that if we could continue to convince Travelers agents to bring the types of business we're looking for to GMS, we'd have a significant advantage."
As GMS's senior vice president, Meryl Groudan is in charge of general oversight of all its current product
Not limiting itself to only Travelers agents, GMS has adopted an "open brokerage approach" in which any licensed P&C agent can submit business to the company. Meryl Groudan, senior vice president at GMS in charge of general oversight of all its current product lines, says that what makes GMS stand out from its competitors in the marketplace is its focus on education and automation.
On the education side, GMS's goals are to enable agents and brokers to educate their clients about the management exposures that exist in the small and medium size accounts. On the automation side, GMS furnishes a number of tools to make it easier for agents and brokers to bring business to the company.
"There is a current misconception among small, privately held companies that they don't face serious directors and officers liability exposures. That's just simply not true," says Groudan. "There are third-party claims to be considered. For example, a competitor might file a D&O lawsuit against a firm alleging unfair competition. Independent contractors can file D&O lawsuits as well. Just because shares of a company are not publicly traded doesn't mean there are no exposures--you can have a disgruntled shareholder in a family- owned business."
In the area of employment practices liability, every firm--public or private--faces exposure, Groudan says. "EPLI didn't even exist as a product 10 years ago. Today, the claims and lawsuits that came about in this area have brought to the forefront the need for insurance coverage. When an EPLI claim is filed against a small or medium-sized company, the defense costs alone seriously impact its financial health. We want to educate agents and brokers about our products so that they can explain to their clients how these products can protect them. The same holds true for private company D&O, not-for-profit D&O and fiduciary liability. We want to assist agents in their efforts to sell these products."
Members of the GMS Wilmington team include (left to right) Naomi Cebenka, Jon Pinkerton, Pam Hauserman, Kathy Hasted, Sharon Beal and Brian Sweeney.
As for making it easier for agents and brokers, GMS has tackled the automation issue with fervor. "We not only wanted to attract new business, but also to develop a more efficient system for agents to access us," says Fritts. "One of the first things we did was to establish a Web site designed to provide the tools the agent needs. We also have hard copy brochures, sales letters, guides and target markets for agents. Gulf E-Systant, a Web site tool developed exclusively for Travelers agents, allows an agent to obtain a coverage indication for management liability exposures without first having to submit applications or perform other cumbersome paperwork. Our Gulf E-Prospect, which is due to start up in August of this year, allows agents to design and execute their own direct marketing campaigns from their desktop at less than $1 per contact. We offer business databases, sample letters, and the ability to customize these materials on line.
"We have two back offices set up," continues Fritts, "one to specialize in the retail segment for those agents that are interested in a bit more instruction, help and guidance and also to maximize our Travelers connection, and one to specialize in the wholesale arena."
The E-Prospect portion of GMS offerings to producers might be of particular interest to Travelers agents, says Fritts, because GMS will provide a list of potential prospects that fit GMS underwriting criteria for agents to target more efficiently.
Groudan says that, in addition to those benefits, GMS also guarantees agents a 48-hour turnaround on quote requests once all required information, including the completed application, has been received. "We provide agents access to critical risk management tools to assist their clients in the identification and correction of human resources related exposures. We have also streamlined our applications to make sure we get all the information we need to provide that fast turnaround, she says."
Fritts says that GMS believes that there is significant growth potential in the small to medium management liability market, for the company, Travelers agents and other agents and brokers. But he adds that GMS does not intend to grow at the expense of sound underwriting judgment. "It's an educational process. We want to inform agents that we are here to make it easier for them to do this type of very specific business with us. On the other hand, we want them to understand the kinds of businesses we want to write. All that will take time. But we're in this market for the long haul," he says. *
For more information:
Gulf Marketing Services
222 Philadelphia Pike, Wilmington, DE
Phone: (877) 467-1736
1295 Northland Drive, St. Paul, MN
Phone: (651) 688-4148
Web site: www.gms.gulfinsurance.com