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The Hanover's specialty lines strategy Super-regional" P-C carrier make a home for agents' specialty risks By Phil Zinkewicz Just five years ago, The Hanover Insurance Group, based in Worcester, Massachusetts, made perhaps the most important decision in its 150-plus-year history. In 2002, Hanover decided to focus on the profitable growth of its property/casualty insurance business and discontinue entirely the retail sale of life insurance products. To carry out this new strategy, The Hanover’s board of directors named Frederick H. Eppinger president and chief executive officer in August 2003. Eppinger’s goal was clear—to build a world-class super-regional property/casualty company. Today Hanover ranks among the top 35 property/casualty insurers in the United States and employs more than 4,000 people across the country. It is considered a leading provider of insurance for individuals, families and businesses. It is a regional company, to be sure. But The Hanover also boasts its “Best of Both” philosophy, which is the ability to provide people, product and service capabilities on a par with the best national companies while offering the local market presence, knowledge and responsiveness of the best regional companies. Eppinger established an immediate set of priorities: to sustain a strong financial position; to establish a world-class professional staff committed to providing the best possible service; to create a strong culture of execution; to further strengthen and develop long-term, mutually beneficial partnerships with “winning” agents; to offer competitive product solutions; and to provide dedicated, responsive service through cost-effective operating models. Eppinger’s personal attention to attracting top talent enabled the company to tap experienced industry leaders like Marita Zuraitis, former president and chief executive officer of St. Paul Travelers’ Commercial Lines Division, who was appointed president of The Hanover’s property and casualty companies. Under Eppinger and Zuraitis, the company’s strategy has been to provide a “total solution” for the customers of their agent partners, thereby helping agents profitably increase their business. Building specialty strength With its personal and commercial lines businesses solidly in place, The Hanover undertook a multi-year effort to build its specialty business, so it could help agents meet the needs of their small and mid-sized commercial clients through one carrier. To carry out its specialty lines strategy, the company assembled one of the industry’s strongest teams, according to Alan Crater, president of The Hanover’s specialty lines business. Crater came to The Hanover from the St. Paul Companies, where he was president of the Northeast region and was responsible for agency management, distribution of specialty and commercial products, commercial lines operations and overall business development. He joined The Hanover in 2004 as regional president for New York and New Jersey. Overall, Crater is responsible for The Hanover’s marine, bond, umbrella, third-party administration and niche market products. Crater’s approach to managing these areas is to surround himself with specialists. Sophia Phillips is vice president of the Marine Division. She joined The Hanover in 2004 with responsibility for building a marine business that capitalizes on specialty market opportunities while delivering enhanced franchise value to the business as a whole. Richard M. Van Steenburgh, a 27-year veteran of The Hanover, is vice president of bond business. Diana O’Brian, regional vice president, is responsible for The Hanover’s institutional specialty niche market business, including educational and religious institutions. Scott Gaffner is president of Citizen’s Management, Inc., which provides loss control, claims services and excess workers compensation to self-insurers, and John Lyons is assistant vice president for commercial lines umbrella. Crater emphasizes that at the core of The Hanover’s success is the independent agent. “We wake up every day asking ourselves how to find better ways to serve our agents and their customers,” says Crater. “We engaged in a multi-year effort to enhance our specialty capabilities. The goal: to provide a total account solution for our partner agents.” He continues, “Our distinct specialty distribution strategy allows us to offer specialty products to three types of winning agents. There are the small to mid-sized agents who place a significant amount of specialty business with us and view specialty as part of our total accounts solution for commercial lines. And there are our franchise agents, who write a complete portfolio of personal lines and commercial lines and sometimes need access to specialty products. And, finally, there are our specialty agents. We’re probably the only regional carrier out there that has the desire to satisfy the needs of all of these agents.” Commenting on The Hanover’s marine insurance strategy, Phillips says, “Our goal is to provide our agent partners with a resource that makes sense for the type and volume of marine business they write—whether they write a lot of marine business or simply need access to products once in a while. Our broad array of marine programs includes niche opportunities such as moving and storage, jewelers, furriers and transportation-related exposures. Our marina and boat dealers program is underwritten by two MGUs that work with agents to provide the depth of expertise needed to successfully write these classes of business. We have employed some of the top marine specialists in the country who provide customized marine solutions for agents who place significant amounts of business. At the same time, agents who only occasionally see inland or ocean marine exposures can access the same high degree of experience and service through our Marine Underwriting Advantage Unit.” Bond division leader Van Steenburgh says his area has made great strides in the last couple of years. “We have endeavored to offer capabilities in terms of product array and on the scale of a national carrier,” he says. “Among the products The Hanover offers are surety bonds for contractors doing business with public and private owners, commercial surety covering compliance and performance obligations other than contract; coverage for surety fraud, theft of equipment, etc. Over the past three years we’ve built an organization to service bond and surety agents, while also serving property agents. Our BonDirect Web-based point-of-sale program is available in 8 states, with a view toward servicing 20 states by the end of 2007. We can produce bonds right in the agent’s office where they can present them to their client in real time,” he says. Kudos from agents Jay Bergstein, executive vice president of The Capacity Coverage Company, a New Jersey-based general agency, discusses his relationship with The Hanover. “We signed on with The Hanover in August of 2004 and started writing business for them in 2005. They were looking for new agency appointments in the property and casualty business, and we were looking for new carriers. Our experience with The Hanover has been special in so many different ways,” Bergstein remarks. “We are a general P-C agency with some specialty niches within our organization. We didn’t sign on for The Hanover to write our specialty book, but our relationship with the company expanded in such a short period of time that they became a writer of our specialty lines. We do a lot of marine insurance business, umbrella, warehouse, and moving and storage. The Hanover was able to satisfy our needs in all these areas. Moreover, we are in constant touch with top executives at The Hanover, both on a business and social level.” Thomas A. Flynn, president and CEO of ONB Insurance Group, which is the largest agency in Indiana with $100 million-plus in premiums, has had considerable success with The Hanover’s Avenues Educational Advantage, assisting him in carving out a niche in educational exposures. “We had a concentration in public entity risks as well as educational institutions for a time, but the educational exposures weren’t doing well,” Flynn comments. “With the assistance of The Hanover’s Diana O’Brian, we put together a program for educational institutions that turned things around. The Hanover hires experts in a given field and they re-examine a risk from the standpoint of high concentration of property value and a full array of liability issues. There are the school buses that must deal with children with special needs, as well as other transportation issues. These are the things The Hanover addresses, and the company addresses these problems with the agent’s needs in mind as well.” Says Crater: “We want to build deep partnerships with agents who plan to grow, who invest in their business, and who will participate in joint business planning. And agents are willing to commit to us because they know we will commit to them.” * |
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