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A pioneer in nonstandard auto Unitrin Specialty expands to new states, building on its agency relationships By Phil Zinkewicz In 1946, when Johnny came marching home again, he found a home front that was elated with victory and full of pride. As is usually the case when a major war ends, the large number of males returning to their country triggers a baby boom, and World War II was no exception. Between 1946 and 1964 more than 75 million Americans were born. Despite the elation that existed at the end of the War in the late 1940s, problems arose. Both the housing market and the auto market had to absorb a lot of growth. Auto insurance was a problem for returning veterans. Those who had entered the War in the early 1940s were very young. Most of them didn’t have cars before the War started, or even drivers’ licenses. Consequently, auto insurers in those years looked upon returning veterans as poor risks. Even though those auto insurers had posted good results during the War years because gas rationing and a reduction in cars on the roads led to fewer claims, they were still reluctant to take a chance on returning veterans. And so the year 1946 will be remembered not only for the beginnings of the baby boom generation, but also for the birth of a new insurance phenomenon—the nonstandard auto insurance market. Financial Indemnity Company (FIC), formed in 1946, was one of the earliest participants in that market. Over the last 60 years, it has evolved to become Unitrin Specialty, which provides personal and commercial nonstandard auto insurance through more than 8,500 agents in 22 states. John Mullen, Unitrin Specialty president, notes, “It really isn’t coincidental that FIC turned 60 last year along with other baby boomers like Cher, baseball Hall-of-Famer Reggie Jackson, and director Steven Spielberg. The company was formed to address the insurance needs of our returning World War II veterans, who were settling into civilian careers, buying homes and cars, and starting families. However, because of their age and lack of driving experience, many could not purchase automobile insurance from the standard carriers.” Shortly after FIC began doing business, the original owners sold the company to Kenneth Vaughn, who served as FIC’s president until 1968, when Vaughn sold the company to Teledyne, Inc. In 1990, Teledyne spun FIC and the remaining insurance entities off into the newly formed Unitrin holding company. “Vaughn was quite an entrepreneur,” explains Mullen. “Before buying FIC, he had already achieved success in the real estate and construction businesses and, along with his brother, owned a fairly large automobile dealership. In later years, he started a classic car restoration business in Santa Monica with customers from all over the world.” One of the first changes Vaughn made was changing the company name, originally known as Associated Veterans’ Aircraft and Automotive Insurance Company. Although the name recognized returning servicemen, Vaughn never planned to insure aircraft. Mullen joined Unitrin, Inc., in April 1996 as president of Financial Indemnity Insurance Company and assumed responsibility for all of Unitrin’s Specialty insurance companies in 1999. Today, “We are one of the nation’s largest nonstandard private passenger auto and commercial vehicle insurance carriers,” says Mullen. The company has earned an A.M. Best rating of “Excellent” for financial stability for more than 20 years, and last spring, Standard and Poor’s Ratings Services affirmed its “A” financial strength ratings on Unitrin’s P-C units, which include Unitrin Specialty. The parent company, Unitrin, Inc., breaks down into four independent units or “brands.” There is Unitrin Direct, which sells personal automobile insurance on a direct basis; Unitrin Kemper Auto and Home, which sells auto and homeowners insurance on a preferred risk basis; Unitrin Business Insurance, which sells commercial insurance through a network of independent agents; and, finally, Unitrin Specialty. Some of the holding company subsidiaries also sell life and health insurance and consumer financial products. Unitrin’s Life and Health Insurance Group offers life, health and accident insurance to customers through a national network of 2,500 company-employed career agents and 250 independent agents. Fireside Bank is one of the oldest and most highly regarded consumer financial companies of its kind, according to Mullen. It specializes in assisting individuals with marginal credit histories to purchase pre-owned automobiles that provide vital transportation to their places of employment, he says. However, Unitrin Specialty is the firm directly descended from FIC and from the early days of writing nonstandard auto business. Today its 750 employees operate from three offices—in Dallas; Woodland Hills, California; and Salem, Oregon. “In its formative years,” explains Mullen, “FIC was based in California and wrote only in that state. As time passed, the organization began to branch out, writing nonstandard auto in the Northwest, then in southwestern states. Soon, we began writing commercial business. In 1995, Unitrin Specialty acquired two nonstandard automobile insurance companies from Milwaukee Insurance Group, giving us a greater presence in the marketplace. Our long-term objective is to be one of the top three carriers for our products in at least 80% of our agents’ offices.” Referring to Unitrin Specialty’s 8,500 agencies, Mullen notes, “We’re looking to expand that number because many agencies we deal with are headed up by baby boomers, who are looking to retire. “We have recently entered Florida and we’re looking closely at Virginia and New Jersey,” Mullen continues. “We have people looking into the regulatory legal climates in Mid-Atlantic and Eastern coast states where we are looking at further expansion opportunities.” Heading up the search for favorable state regulatory climates is Lisa Bage, senior vice president for product development, pricing and sales. “Deciding on which states to enter is a major first step,” says Bage. “We have a full-time team whose job is to do that extensive research. We also depend on our field agents to provide us with the information we need to help us properly price our products. Our agents are very important partners and are the face of Unitrin Specialty to consumers.” By building a strong independent agency network, Unitrin Specialty is responding to the desire of most consumers to work with an agent who offers a full menu of product choices, Bage says. “According to research, 8 out of 10 people want to buy their insurance from a local adviser. We are committed to selling through independent agents.” Old company, new ideas Recent major technological investments by Unitrin Specialty include “WebRater 3.0” and a newly redesigned Web site. “WebRater 3.0,” the newest version of its proprietary Web-based rating software, will be completely rolled out to agents this spring. The upgraded software features a faster vehicle selection screen, a saved quote feature and an enhanced search engine. “We spent considerable time and money and completely overhauled our Web site based on agent and policyholder input,” says Mullen. “It’s more than a pretty new face. It’s faster, easier to use, easier to change and easier to maintain. It also lays the foundation for more important technology projects to come like rated endorsements and policy lapse handling. “The value that independent agents bring to the marketplace and to the consumer is important, and we want to be part of it,” she continues. “We know that agents first look for stability in companies, and then technology and customer services. We think that by blending our organizations and making major investments in technology to support our independent agents, we can become their carrier of choice.” * For more information: |
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