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AAMGA Special Section American Modern Home president discusses industry conditions First of series of audio interviews running at AAMGA Web site By Phil Zinkewicz
AAMGA members now have a new educational tool at their disposal. Periodically, the AAMGA Web site will contain audio versions of interviews with insurance industry market leaders. Called “In Context,” the audio interviews will explore leaders’ views on market conditions and on regulatory and legislative developments, among other topics. The first series of interviews—three in all—was conducted by Bernie Heinze, executive director of AAMGA; and the interviewee was John Hayden, president of American Modern Home Insurance Group, a specialty lines insurer. In the three-part series, Heinze questioned Hayden about the state and direction of the personal lines market, American Modern’s strategic objectives in the marketplace, and the company’s long-standing heritage of commitment to the wholesale distribution industry. At the outset, Heinze asked Hayden to provide a brief background of American Modern. “First, I’d like to say that, although American Modern is a publicly traded company, essentially we are a family business,” said Hayden. “We trace our beginnings to 1938, when my grandfather started up an auto finance company. During the Second World War, we opened up a consumer finance company to assist the wives of military men who were overseas. When the war ended, and those who fought returned, there was a tremendous need for housing, and we provided financing for manufactured housing and mobile homes. In 1955, American Modern was created to insure that housing. In 1968, we struck our first deal with a general agency. Those we now consider the ‘legends’ of our business were my mentors. I was in product development, and I traveled all over the country and met them personally. Today, I am personal friends with their successors. I am proud to say that the people with whom I do business are my friends.” “It’s all about relationships, isn’t it?” asked Heinze. “Absolutely,” said Hayden. “We are a highly sophisticated company in terms of technology, but it all comes down to the element of trust. The alignment of our special interests drives that trust. We have 1,200 people in our organization, and they all work to establish strong personal relationships with the people they work with.” In addition to manufactured housing and mobile homes, American Modern also writes what Hayden calls “toy” business. That includes travel trailers and RVs; watercraft and boats; personal watercraft; motorcycles; and elite collector programs. The insurer also writes dwelling fire coverages, commercial insurance, and long-haul truck coverages. In addition, American Modern offers financial solutions, warranty products, and marketing services. “In the traditional insurance agency, these products are atypical,” Hayden observed. “Quite naturally, agency leaders need to concentrate on their core areas of operation. Our job is to bring this business into the agency in as easy a way as possible. In the last four years, we have invested heavily in automation and we plan to continue doing that over the next three years. We are creating a ‘point and click’ automation program that can be handled by an entry-level CSR in an easy way.” Heinze then asked Hayden to offer his views on continuing education for MGAs and, in particular, the AAMGA University. “We firmly believe that the AAMGA University represents the future of association members,” Hayden declared. “Too often, MGAs operate on an island, within certain states. The University offers them an opportunity to broaden their horizons. The key is to attract talented people, retain them, and then inspire them. The AAMGA University has our full support. We have also created our own university, where we train our own people in areas such as claims handling and adjusting.” In the second part of the series, Heinze asked Hayden to comment on Hurricanes Katrina and Rita and to explain how these events affected American Modern’s business. Said Hayden: “Hurricane Katrina is the single most significant event in the history of the insurance industry, and it certainly was for us. We have a hundred adjusters in Mississippi and Louisiana. Our goal, whenever a catastrophe strikes, is to settle 80% of claims within a 30-day period. We are proud of what our people have done, despite the criticism that is being levied against the insurance industry at present. Our catastrophe planning is ongoing. Moreover, our claims people are highly trained.” Here, Hayden told a story about the days when he first owned a boat. “I was on my boat, and suddenly I ran over something in the water. Instead of purring, my boat started going thumpety-thump. I took the boat in for repairs, and the repair people could see I knew little about boats. They turned a $200 job into a $2,000 job. Our agents know how to handle that kind of fraud. They can take apart boats and motorcycles and then put them back together, so they know when someone is trying to cheat them. They keep our costs down by spotting fraudulent claims. Ninety-two percent of our claims are handled by our own employees, and that has helped us contain losses regarding Katrina.” In Part 3 of the audio interviews, Heinze asked Hayden to comment on the ongoing investigations into insurance industry operations. “Investors have lost confidence in the insurance industry,” said Heinze. “How can we rebuild that confidence?” “I think the pendulum is swinging too far,” said Hayden. “There was a time when you were innocent until proven guilty. Today, because of the Enrons, the Tycos, the Adelphis, the industry is being viewed as guilty until proven innocent. The abuses that have taken place in the insurance business have only added to that distrust. People should be held accountable when they do something wrong, and if they commit criminal acts they should be criminally prosecuted. But don’t tar the entire industry with the same brush. This is another argument for the AAMGA University. We’re proud of our team at American Modern and the integrity they demonstrate on a daily basis. I believe that those who attend classes at the AAMGA University share that same integrity. Hopefully, that pendulum will swing back to the middle, where it belongs.” * |
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