MARKETING
Three-pronged strategy includes client service
unit and online approval and pricing
By Dennis Pillsbury
From left: Dale E. Lauer, president and chief operating officer of SAFECO Business Insurance, and Michael Hughes, senior vice president-underwriting.
A number of major insurance companies have announced strategies to move into the small and mid-sized commercial arena. For many of these companies, small commercial represents a departure from their normal marketing thrust and is an attempt to reach a segment of the commercial insurance market that has emerged as the fastest growing area in American business today.
For SAFECO, however, this has always been the market of choice. The insurer's new strategy is not designed to reach a heretofore untapped market, but to enhance its current strategy so it can do an even better job of underwriting and servicing this market and the agents who bring it to them. SAFECO's new three-part strategy--known as E*S*P™--includes automated underwriting, a client service unit (CSU) and a Web-based new business entry module.
"The strategy is being phased in through 2002 and 2003," says Dale E. Lauer, president and COO, SAFECO Business Insurance, the unit that specializes in small to medium-sized businesses. The unit has annual revenues in excess of $1.5 billion, placing it among the top five writers for this market segment.
"Automated underwriting for BOPs and commercial auto already is available and will be available for workers comp in the first quarter of 2003," according to Dale. He continues by pointing out that the underwriting system "was developed for renewals first, which is certainly different from the approach used by many other companies. Our intention was to develop the best possible price for our renewals, because we want to reward their loyalty and keep those customers. We recognize that we can't grow profitably--and that is our ultimate goal--by just adding new business. We need to keep our current clients and give them good reasons for staying with SAFECO."
Michael Hughes, senior vice president - underwriting of SAFECO Business Insurance, adds, "Ultimately, we will be more competitive. Automated underwriting for small accounts actually brings more precision to the process. But that is only part of the picture."
He continues: "The client service unit adds another dimension, providing an exclusive toll-free telephone number for direct policyholder service. Agents can opt for this service for a small fee. The service unit acts as an extension of the agency, providing policy service, endorsement processing, insurance certificates, renewal questionnaires and direct bill service. It's still in its infancy. We envision that the service people eventually will be doing up-selling and cross-selling."
Nancy Cooper, vice president and office manager with Van Gilder Insurance Corp., Denver, Colorado, subscribes to the SAFECO CSU because it "gives us the time to deal with clients more proactively. We have been using SAFECO's CSU in personal lines and it's been very effective." Van Gilder has offices in Colorado, Arizona, Wyoming, Kansas, Texas and California.
She continues that it is important for agents to "prepare insureds ahead of time. It takes a while to educate clients." Nancy notes that the long-term clients still "only want to talk to us. Brand-new clients are more accepting. When the long-term clients call to make a change, we advise them to call the CSU number the next time and it will be taken care of while they're on the phone."
Nancy adds: "Probably the most important point is that we have not heard anything negative. We have three ladies who work with the CSU and they are very happy about the service. And we've had no complaints from customers."
Dave Walton, vice president, Mikels Insurance, Downey, California (Orange County), says that his agency decided to use the CSU unit because it "frees us up. We probably would need at least one other person to handle the types of things that are being handled by the service unit."
He says that the agency "prepared our customers ahead of time, explaining that this was an extra service provided to them. And it's worked out that way. We have had good feedback. The clients always get right through to the CSU when they call. Most of the time, calls from our BOP customers involve certificates. When they call the CSU, they can get the certificate faxed to them right away. A lot of time, they need special wording on the certificate and SAFECO has been able to accommodate that. All the feedback we've heard has been on the good side."
The final piece of SAFECO's three-pronged strategy is the Internet-based, new-business module, SAFECO's Mike Hughes maintains. "Agents will be able to get online approval and pricing at the point of sale."
"We'll be part of the pilot program for this," says Cindy Phillips, office manager in the Everett, Washington, office of The Unity Group, based in Bellingham, Washington. The pilot is set for the end of October for BOP policies. "We're really excited about doing this. We're looking forward to reducing the amount of time it will take to obtain quotes. To be profitable in the small commercial arena, you have to be as efficient as possible. This certainly will help with that."
She concludes by pointing out that "we don't mind being the guinea pig. This will give us input into how we would like to see it work."
Dale Lauer admits that SAFECO is not the first company to add automation or service center support for the small business market. "However, we are the first to put together a three-part strategy that will help agents maximize their penetration of this important and growing market by harnessing the power of the three E*S*P components."
Mike Hughes adds that the program grew out of the company's long-term experience in this marketplace. "Our focus has always been on the small and medium-sized commercial accounts with premiums under $100,000.
"As we looked more closely at this market, we found that there were many businesses in this sector that had a low- or medium-hazard profile and lent themselves to automated underwriting."
"Our goal is to provide all the services our agents need to write this business (small to mid-sized commercial accounts) profitably."
--Dale Lauer
Dale adds, "The plethora of information sources now available on the Internet actually means we can refine the underwriting information electronically and actually develop rates that are more precise vis a vis the underlying risk factors."
Mike points out that the system offers significant advantages for all parties involved--the classic win-win-win combination:
* "Our agents get the best quotes via an easier transaction in less time on a once-and-done basis."
* "Our commercial insureds get competitive premium rates."
* "Because our underwriters will be handling 10% or less of our smaller commercial lines accounts, it frees them up to focus on the more complex medium-sized accounts where their expertise is needed and that can potentially generate greater profits for agents."
Strong agency support
"Our goal is to provide all the services our agents need to write this business profitably," Dale says. "As Mike mentioned earlier, we plan to provide up-sell and cross-sell capabilities from our service centers. But just as important is the fact that the service center allows our agents to offer commercial clients 24x7 service via an exclusive toll-free telephone number. Our object is to act as an extension of the agency. We're also providing PDF files of our sales support materials that our agents can download."
Van Gilder's Nancy Cooper notes that "SAFECO always has been very much a partnership with the agency force. They are caring people and want to do the best thing for the agency force and for their clients. The people are very good to work with--even the underwriters are pleasant. I like working with a company that doesn't jump around all the time and look forward to working with the online quoting system."
"We expect to grow by performing better than the competition," Mike says. "We already have a respectable market position, but we're looking to increase that. We are convinced that our approach will provide the best product for our agents and this market that we serve."
Dale continues by pointing out that the commercial lines online system "is being built by the same people who did our personal lines system. That means that agents who are familiar with the personal lines system will be able to use the commercial lines system with little or no extra learning time. The system is user-friendly, so even agents who are not familiar with our personal lines system can learn how to use it in a relatively short period of time.
"E*S*P is designed to anticipate the future of the small to medium-sized business insurance market," he concludes. "We're going the extra mile to create a comprehensive system that provides agents with what they need for growth today--and for years to come." *
For more information:
Web site: www.safeco.com