Making its mark in the Midwest

Harleysville looks to "build something special" with agents

By Dennis H. Pillsbury

Harleysville Insurance has always been a stalwart company for small account business. However, in 2004, when Tom Clark took over duties as senior vice president of field operations for the Pennsylvania-based company, he wanted to inject a new spirit of entrepreneurship that would enable the company to strengthen its presence in the middle market arena, as well.

Recognizing the need to create greater authority closer to its independent agency customers in order to attract larger accounts, while also expanding the company’s geographical scope, Clark realigned Harleysville’s network of field offices into four regional zones.

In assembling his regional leadership team, he reached into the brokerage ranks to find an entrepreneurial leader for the company’s new Midwest operation—and selected Bill Granato as Harleysville’s regional president in late 2005. Bill had been with Arthur J. Gallagher prior to joining Harleysville, running the broker’s Chicago office.

Rough Notes spoke with Bill and his management team about Harleysville’s plans to grow the emerging Midwest operation.

Producing the best outcomes

Bill says he and his team first focused on “building true partnerships” with Midwest independent agents.

“Having spent time on the broker-age side of the business, I understand that producers are looking to forge cooperative relationships based on trust and teamwork,” he explains. “They want partners who are flexible and willing to explore various business solutions that produce the best outcome for everyone.

“All agents start out equally with us, but they tend to differentiate themselves very quickly based on the quality of submissions they provide,” he adds.

“We are teaching our staff to act like agents,” says Rich Schumacher, Midwest regional vice president of commercial lines business development. “We want our people to be aggressive and to seek ways to write business. Like agents, we never want them to be satisfied with ‘no’ for an answer. In fact, we want them to take it personally if they don’t get the business they work on.”

That doesn’t mean the company will take everything that comes in the door, says Todd White, Midwest regional vice president of commercial lines underwriting. “What it means is that we will look at every submission to find opportunities that make good business sense.”

Todd adds: “This gives us the flexibility to work on accounts creatively, with an eye toward writing more business. For instance, with the help of our loss control department, we recently provided coverage for a $700,000 account in less than a week after identifying the business as a good opportunity with a true agency partner.”

“Agents expect loss control to be on the same page as underwriting,” notes Paul Doman, Midwest regional loss control manager. “When we look to add loss control representatives to our staff, we seek risk professionals who can help us write profitable business for our agents—not inspectors who simply identify what’s wrong with a risk.”

Building market share

“Our long-term plan is to develop at least a 3% market share in every state in which we do business, but the only state in our territory where we’re close is Michigan,” notes Bill. “Right now, we are looking for agencies that can get us to $500 million in the Midwest in the near future.

“The Midwest region offers about $20 billion in potential premium in Harleysville’s core lines of business,” he observes. With Harleysville’s Midwest commercial premium volume at approximately $100 million (out of more than $1 billion of total premium written companywide), Bill sees a tremendous growth opportunity. “This is an opportunity for all of us to build something special.”

Harleysville is a company “with a great deal of capability,” says Chuck Naso, president of property/casualty operations for The Horton Group, an independent agency based in Orland Park, Illinois.

“We’ve had a relationship with Harleysville for about seven years, but we primarily used the company for niche markets such as residential homebuilders,” Chuck explains. “However, we’ve increased our writings with the company by four or five times since Bill and his team came on board. We are now able to deal with local people who are empowered to run a business, and they use good judgment in the business they accept.”

Noting that the new management team has “added quite a spark to Harleysville in the Midwest,” Chuck adds, “They are an enthusiastic group of people who are really interested in writing business that makes sense.”

Making change happen—together

“Harleysville’s desire to focus on the upper middle market aligns very well with our own agency plans,” observes Scott White, CIC, an owner and sales manager with Hetrick & Associates, Marquette, Michigan. “It’s nice to grow with a company with which we have had a long, wonderful relationship. And, when a company partner decides to change in the same way our agency is changing, it can be very dynamic.”

Hetrick & Associates has been writing business with Harleysville since 1975, when the company conducted business as Lake States Insurance Company. The agency was recognized by the insurer as its “agency of the year” in 1992. “And this year will be our best so far with Harleysville,” Scott notes.

He continues, “Harleysville is filling a void for the agency that cannot be satisfied by a traditional national company. We are very excited about the new plans and changes. The company has tremendous resources and a depth of talent that has been enhanced by the new additions,” he says. “The new people are working with the existing team to build a culture of profitable growth.”

Chuck adds: “Harleysville’s people are still getting their feet on the ground, but they are definitely headed in the right direction. A lot of other brokers have the same opinion and they’ve told me that Harleysville is a company that commands their attention.”

New technology

Bill admits, “There still is much to do” in order to secure the complete confidence of independent agencies in his territory. High on that “to do” list is the delivery of a new commercial lines policy administration system called accessHarleysville℠, which is designed to improve the company’s ease of doing business with agents, create internal efficiencies, reduce expenses and improve new product delivery.

“The new commercial lines policy administration system recently went live on the East Coast and will be here in the Midwest in 2008,” Bill explains.

Akhil Tripathi, Harleysville’s senior vice president and chief information officer, who previously served as CIO for Marsh Affinity and Private Client Services, and was the IT executive in charge of AIG’s Internet insurance exchange, now stewards the accessHarleysville initiative.

“We’ve made tremendous progress in the past two years on the technology front as we’ve focused on the needs of our agency partners with respect to their ease of doing business with us,” comments Tripathi. “Teamwork throughout our company, as well as with our agents and technology partners, has enabled us to begin implementing innovative technology-based solutions that transform the way we develop products and distribute information to our employees, agents and policyholders.”

Underscoring Harleysville’s progress is the company’s recent ranking of 23rd (the highest among property and casualty insurers) in the InformationWeek 500, the publication’s annual listing of the most innovative information technology organizations among all companies in the United States.

“Agents like a generalist that can do a lot—and that’s Harleysville,” says Todd White. “We provide strong loss control services and have a regional claims operation in Minneapolis that is second to none. Right now, 35% to 40% of our writings are in construction; and while we intend to remain strong in that area, we also will enlist the support of our agents to bring in new business from other classes. As a result, we expect construction risks to decrease to about 25% of our overall book.”

Rich Schumacher adds: “Hard work and acting on promises will ultimately lead to trusting relationships between Harleysville and its Midwest agencies. We must repeatedly prove ourselves through excellent responsiveness and service—on both new and renewal business. That’s how great relationships are formed.”

Bill concludes: “While we continue to develop a strong book of small account business, we also are growing with agencies that are focused on the middle market—which has been a cultural shift for us. For one thing, it means we are in a greater number of larger agencies now. We’re just getting started, but we’ve already seen significant growth in this area, particularly this year.

“There is a very real sense of excitement that permeates the Midwest offices. People like feeling empowered and being part of something that is growing and putting its mark on the region.” *

For more information:
Harleysville
Web site: www.harleysvillegroup.com