By Dennis Pillsbury
Annette Merz is president of the newly named Zurich North America Financial Enterprises.
On May 1, the Financial Services Division of Fidelity & Deposit Cos. (F&D) became Zurich North America Financial Enterprises to better reflect its role as a member of the Zurich Financial Services Group. The division had gross written premiums of $260 million last year. It employs about 220 people, with some 120 in Baltimore and the balance in the field. The division provided approximately half of the business written by F&D. Annette Merz, president, talked to us about the plans to expand its core business in the targeted area of small to medium-sized banking establishments, as well as expand to other niche areas that need similar products.
Currently, the company handles approximately 12% of the banking market and around 35% of its market segment. "Over the past few years, we have also made major inroads into the credit union market, as well as insurance agents, insurance companies and accountants," she points out. The company also is one of the top four writers of commercial crime insurance in the country in terms of both production and item count and is a leading provider of e-commerce coverages.
Merz says the company's strategy is to build on these specialty areas in both a "vertical play and a horizontal play."
The vertical play involves taking advantage of the "extremely deep and intimate knowledge of our customer base. We know and understand their needs. What we want to do is surround them with as many services and products as we can so we can truly solve all of their risk transfer needs. We provide roughly 40 products and services needed by this community."
She continues that Zurich North America Financial Enterprises provides these services in one of three ways. In some cases, the company does everything, including creation of the coverage and providing it to the marketplace. This would include the company's core insurance products such as bankers blanker bond and directors and officers coverage. In other cases, the company will go to a sister company in the Zurich Group to have that company design a solution. One example would be coverage for an environmental problem that may have emerged from a loan situation. The third situation involves the company introducing the client to one of its strategic partners. An example would be if a client needed to have a security assessment for e-commerce. The company has a relationship with an outside firm that can perform that service.
The company also offers standard loss control services. "We provide customers and agents tools to assess exposures and mitigate risks," Merz says, adding that "we just recently launched a CD ROM about D&O that is sold to customers. It's been extremely well received."
Another service that Zurich North America Financial Enterprises offers is help with efforts to get into the distribution of insurance. "This is something we can do only because we are part of Zurich," Merz notes. "We actually work with individual banks and banking associations and their insurance agent partners to enable them to bring insurance solutions to their customers."
The horizontal play "grows out of the fact that we have so many products that lend themselves to be utilized by markets outside of our target area," she says. "One area is the whole mercantile field and the other is the e-commerce area. We take the products that we have for the banking industry and modify them to fit these new markets. In many cases, we operate as the product provider for other units of Zurich. This is an area of growing importance for us." She also notes that in the e-commerce field, "there is an international component that we are able to handle because of our worldwide resources."
Merz continues that "the real differentiator is our ability to offer a comprehensive solution to our target markets. This is enhanced by being part of the Zurich.
"But the most important differentiator," she adds, "involves the intangible assets, including the intellectual capital within our organization. We have a lot of knowledge that we share with our brokers and the ultimate customers. And, because of our focus, we are able to provide leading edge market intelligence. This is an immense competitive advantage that allows us to be proactive in the marketplace. We're actually able to respond to the emerging needs of the market. This also extends to our field personnel, who are topnotch professionals with a keen understanding of the business. They have a lot of authority, which means that decisions are made quickly.
"Another very important component is exceptional and reliable claims service," Merz says. "We are actually gaining customers through our claims service. I believe this is unique and unusual. We have a very high retention rate and are adding a lot of new business during a time when there is significant merger and acquisition in the banking industry."
Merz sums up by noting that the company remains a "specialized carrier that focuses on its primary market but also leverages that knowledge to other markets. We're not always the cheapest, but we offer real value. We also have the unique advantage of being a specialty carrier that is embedded in a large corporate entity with enormous resources." *