Charles Kavitsky (left) is President/CEO of Fireman’s Fund Insurance Company. Joe Beneducci is Executive Vice President/Chief Operating Officer of the Novato, California-based firm.
Fireman’s Fund new management team
stresses need to be “recommenders”
By Phil Zinkewicz
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Charles Kavitsky (left) is President/CEO of Fireman’s Fund Insurance Company. Joe Beneducci is Executive Vice President/Chief Operating Officer of the Novato, California-based firm. |
Charles (Chuck) Kavitsky, president and chief executive officer of the Novato, California-based Fireman’s Fund Insurance Co. (FFIC), likes to tell the following story when describing how his company communicates with its agent producers and policyholders:
“I wanted to buy my father a digital camera for Father’s Day. The first thing I did was to go onto the Internet to see what was available. I saw cameras of all shapes and sizes and was deluged with information—technical information such as what made the cameras work, what they were capable of doing, what sorts of accessories were available—all of which meant nothing to me. The Internet gave me plenty of choices, but no advice, no expertise.
“I went to a store, one of a well-known chains that carried digital cameras. I was in the store for quite a while and no one even approached me to ask what I wanted. Finally, I waved my hand as vigorously as I could to get the attention of a young salesperson. I told him I wanted to purchase a digital camera and he just pointed to a shelf with a row of digital cameras. His first question to me was: ‘How much do you want to spend?’ I saw that the cameras were priced from $250 to $1,400. I said: ‘I want to spend between $250 and $1,400.’ This salesperson offered me no advice, no explanations as to why one camera was priced differently from another, nothing.
“I left without buying a camera. Eventually, my wife—she knows everything—brought me to another store, where a saleswoman asked me the question that should have been asked the first time: ‘Is your father a seasoned photographer, or does he want a camera to take pictures on vacation or when someone comes over to visit?’ I said he wants a camera for vacations and visits. She then showed me a camera, which she said had all the features of more sophisticated digital cameras, but which was simpler to understand and to use. Needless to say, that salesperson got my business.”
“Recommenders” not “providers”
Kavitsky says that this little anecdote says a great deal. “At Fireman’s Fund, we are not ‘providers.’ We are ‘recommenders.’ A provider is someone who gives you a great many choices, but no advice as to how to make the right choice. A recommender is someone who takes the time to judge your particular situation, then offers the choices that are right for you.”
Kavitsky is relatively new to the post of Fireman’s Fund’s CEO. Before this, he had been president of Allianz Life, both companies being subsidiaries of Allianz Group. Prior to that he was part of a senior management team at LifeUSA, which was taken over by Allianz Life in 1999. He was appointed president of Allianz Life in 2002.
When he was named president and CEO of Fireman’s Fund in May of this year, Fireman’s Fund Chairman Jan Carendi said: “Chuck Kavitsky’s documented leadership in building teams in an entrepreneurial yet structured way will be instrumental in helping Fireman’s Fund to reach its challenging objectives. It will be his task to lead Fireman’s Fund into a new phase of sustained profitability across market cycles by aligning and focusing the resources.”
“We have the benefit of a powerful parent,” says Kavitsky, “but I knew there would be a period of time during our restructuring where I would have to steady the ship. I was called upon for the task because of my strong experience in distribution. The first thing I did was name Joe Beneducci executive vice president and chief operating officer of Fireman’s Fund.”
Beneducci had been executive vice president and chief administrative officer of the company. Reporting to Beneducci in his new role will be the company’s three business segments—personal, commercial, and specialty (which includes marine, excess and surplus, professional liabilities and agribusiness)—as well as distribution management and marketing, brand development and enterprise operations.
An end to silos
“Before, Fireman’s Fund consisted of independent ‘silos’ that were not coordinated,” says Kavitsky. “I knew that Joe was as anti-silo as I. Joe will apply his years of experience to assist Fireman’s Fund in becoming a more integrated organization that effectively aligns the parallel interests of agents, policyholders and the company.”
Beneducci joined Fireman’s Fund in 1998 after a 10-year career at Chubb & Son in increasingly responsible positions in commercial underwriting, commercial marketing and management. Initially serving as assistant vice president of commercial insurance at Fireman’s Fund, he was promoted to vice president and then senior vice president before being named chief administrative officer in 2002.
Kavitsky continues: “The other thing that Joe and I agree upon, and this will be Fireman’s Fund’s mantra under our leadership, is that the agent is our number one customer and the policyholder is the agent’s number one customer. I am part of three generations of agents. I started out as an agent, selling life insurance while I was in college and later property and casualty insurance. My father was an agent before me, and my grandfather and grandmother were agents before him. My son is also in the insurance business. Frankly, there is no other insurance company better prepared to recognize the important contribution of agents than Fireman’s Fund.”
Another element in the new Fireman’s Fund structure is innovation, according to Kavitsky. “Let’s face it, our industry overall is not known for innovation. A big part of my success with Allianz Life came from the fact that I was known for innovating new products. We aren’t in the business of copying what the other guy is doing. By working with our distribution to find out what the policyholder needs and then designing those products, we will be able to differentiate ourselves from the others in the crowd.”
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“A provider is someone who gives you a great many choices, but no advice as to how to make the right choice. A recommender is someone who takes the time to judge your particular situation, then offers the choices that are right for you.” — Charles Kavitsky, |
Getting closer to agents
Beneducci emphasizes the importance of “differentiating” and getting the Fireman’s Fund brand out there for everyone to recognize. “We are already a strong company with 4,700 employees and $4.5 billion in gross premiums,” he says. “We have a strong parent that is backing us. Chuck has written Chapter 1 with his emphasis on breaking down the silo mentality and becoming more organized. Chapter 2 will be our getting closer to our distribution system, agents who are number one customers. In the past few years, producers have wanted things from us that were just too hard to get at under the old ‘silo’ approach. One of the things we want to do is get some of our high-powered employees out there with agents at the point of sale. We want to make sure agents have the products available to them.”
Kavitsky adds: “This is what we call putting our money where our mouth is. This is evidence that we’re dedicated to working with our agents closely for their benefit and for ours.”
One of the ways that Fireman’s Fund assists agents, according to Kavitsky and Beneducci, is the firm’s iCustomer Series, rolled out just two years ago. They describe the iCustomer Series as a set of Internet tools, information sources and interactive training that targets commercial, middle-market clients in a select group of industries—as well as the producers who go after that type of business. iCustomer’s target middle market consists of customers whose annual premiums do not exceed $250,000.
The program was originally based on a set of CD-ROMs, developed in-house by Fireman’s Fund for agents and customers, which allowed entry into a series of customer-dedicated Web sites (extranet site). In the past year, the company advanced beyond the CD-ROM mechanism and now provides customers with simplified Web access to the industry sites—which now number 19. The company also added a long list of business-to-business vendors with whom they’ve negotiated preferred pricing on business products and services for customers. These products and services range from slip-resistant footwear and office supplies to data backup and staff training.
Some 1,500 iCustomer Series accounts are currently on the books, representing more than $350 million in gross premiums written, with insiders noting rapid policy growth continuing during 2004. The company is eyeing the possibility of bringing a special version of the iCustomer Series to its affluent personal lines customers, a move that could dramatically expand its marketing potential beyond the current distribution force of 2,700 agents.
“Another area where we will work with agents is in our Fireman’s Fund Heritage program,” says Kavitsky.
“Fireman’s Fund was established in 1863, and if you look back at our original mission statement, we promised to donate a portion of our profits to the widows and orphans of firefighters who are killed in the line of duty. Today, the firefighting community at the local level is facing some serious challenges. In many cities and towns, there have been severe budget cuts. Many fire departments can’t afford the firefighting equipment, safety equipment and training they need. Especially in these times, when firefighters are being asked to take on new duties such as responding to terrorist attacks, they need to learn new skills to save lives and to safeguard their own. This year our Heritage program will donate up to $10 million to firefighting communities around the country, and we will make similar donations each year, based on our profits. We are asking agents to become involved at the local level.”
Key issues
Asked to discuss what issues are facing the insurance industry today, both Kavitsky and Beneducci said that TRIA, the government reinsurance backup for insurance company terrorist exposures, is on top of the list. “We stand with most of the insurance industry in believing that the government must understand that TRIA must be renewed in the face of the ongoing terrorist risk,” Kavitsky said.
Beneducci added: “If you look at TRIA, not in a negative sense, but as a reshaping of the landscape of the entire property and casualty marketplace, then you can recognize its importance. The global reinsurance market is very shaky. It is still trying to stabilize its feet after September 11. Add to that low interest rates and the need for the industry to attract capital, and you begin to recognize that the industry is going through some very serious rites of passage and that’s not necessarily a negative thing.”
Another issue that Kavitsky considers important for the industry to come to grips with is transparency. “The industry must become more transparent to consumers, regulators and legislators, especially in terms of reporting requirements,” he said.
Kavitsky and Beneducci also discussed cash-flow underwriting as an issue to be reckoned with. The property and casualty market is turning soft, at present, but slowly. If the stock market rebounds to the levels it was at during the early 1990s, is there a danger that insurers will return to the reckless cash flow underwriting scenario of those years?
“There’s always the danger that some companies will not learn from the past,” says Kavitsky. “But I’ll tell you this. If that happens, the companies that sell insurance only as a commodity and chase after price will be the ones that suffer. We don’t look upon insurance as a commodity and we have no intention of doing so. As I said before, we are recommenders, not providers. We are selling our expertise and the expertise of our distribution system. That is what is driving Fireman’s Fund now and that is what will drive our company through future cycles,” he said. *
For more information:
Fireman’s Fund
Web site: www.firemansfund.com