Published Since 1865 Boston, Mass. October 24, 2014 Vol. 275 No. 12

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Industry Panel Discusses Social Media, Going Paperless, Coastal Legislation, Market PredictorsPLANTSVILLE, CONN. — The use of social media and technolo-gy, new coastal legislation and future market conditions, were discussed by a panel of industry experts during the Independent Insurance Agents of Connecticut (IIAC) mid-year convention last week.

Using Social MediaIIAC Chairman and panel moderator Jim Suzio began by asking the pan-elists to discuss how their companies use social media.

Michael Christiansen, president of the northeast region’s business insur-ance unit at Liberty Mutual, noted that for the last few years the big ques-tion for insurers has been how to use social media to drive customers to the business. “The strategy is to get your message out within those social media outlets [specifically Facebook, Twitter, LinkedIn, YouTube], so peo-ple can learn about you and what you do specifically with your business to help them with their insurance. Once that occurs, hopefully you’ll be driv-ing consumers to your website and you’ll get a sale.”

Richard Creedon, president and chief operating officer at Utica Mutual, said he thinks companies and agents need to be doing more than simply getting their message out to consum-ers via social media; instead, agents need “to think of it as something that’s participatory. It’s not tradi-tional marketing [where] you put the message out there. We’re going to sell ourselves short if we just think of it as a marketing gimmick. There’s a vision that we have to have about how it’s re-ally going to transform our business and how we underwrite and how we all work together from the agency and the company side of the business.”

Referencing his 21-year-old daughter, who rarely prefers texting to talking on the phone, Creedon emphasized that it is a “mistake is to think that the people who are out there, shopping for auto insurance [on the Internet], are all price shoppers. That’s not the business. There’s a whole world of consumers out there where there is a value proposition in this and in the social media connections it is creating.”

James Kennedy, president and chief

executive officer at Ohio Mutual, cit-ed a recent Gallop poll that found the vast majority of people use social me-dia to talk to family and friends, while far fewer of them use it to buy prod-ucts. He commented, “Social media is a tool that you can use to extend your relationship in that digital world and let people know what you do and all the good things you do. And there-in lies the hook of social media: it’s not about an immediate sale.”

Kennedy said to the independent agents in the audience, “you will be known by your customers through the experiences they have with you.” He suggested that the local nature of the independent agencies is “per-fect” for social media and companies should be sharing their volunteer work in their communities online. “If you’re volunteering in your commu-nity, that’s the stuff that you need to get out there because that’s the stuff people look at.” Including a link of the company’s website in a post can help draw people in, Kennedy said.

Going PaperlessWhen asked about efforts to go paper-

Reprinted with permission from The Standard, Vol. 274, No. 12, October 24, 2014. Copyright 2014, Standard Publishing Corp., Boston, MA. All rights reserved.

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less, Kennedy expressed enthusiasm for the trend. “The paperless dynam-ic is something that is long overdue in my view. We have spent way too much money chasing paper.” He de-scribed a program Ohio Mutual has that is an “individual portal for every insured branded to the agent for each customer.” To access the system at any time day or night, insureds log in us-ing their email address. “To me, that’s the answer, and it eliminates a lot of the paper trail for all of us. It will take cost out of our system, and we need to take cost out of our system in a lot of ways to get our products more competitive.”

The problem, Kennedy noted, is that his company only has 17% of email addresses for policyholders. “Why? Because we have not yet been suc-cessful figuring out a way to have our agents ask that question at the point of sale.” He said that it is imperative that they figure out how to do that. “It’s one more question that opens that window and then it eliminates a lot of this [paper] traffic that we’re talking about. It’s a tool we have, we see great opportunity and great up-side for it because it can get nothing but better.”

Creedon said Utica Mutual was tack-ling the issue from the both the sales and service sides in an effort to make it easy to follow for policyholders and to create a servicing platform to re-lieve customer service representatives (CSRs) from some of the administra-tive tasks on their plates. He stated, “We have to push those basic things like exchanging a vehicle and making payments off to insureds. We have to move those over so customers can self-manage those kinds of transac-tions to free up your CSRs for more value work, to cross sell, to up sell, to add value to the operation.”

Christiansen noted that Liberty Mu-tual has “made significant investment in automating small commercial to try to move away from a paper-in-tensive environment, but then as you

get into the larger accounts, the paper starts to flow, and it’s more difficult to get away” from that. Having facil-ities such as service centers in place has allowed agents to “write the new business and then transfer all of the servicing of the policy to a service center that is staffed by our people,” he said.

Suzio urged the carriers to take the agency perspective into consideration when they they think about paper-less transactions. “I think we are very paper-dependent, and we’re trying to suppress paper both on the agen-cy side and on the company side, but we need to figure things out together. Even [when it comes to] basic policy delivery. When we work together on those things, it’s much more benefi-cial. Not that we have a lot of say in it, but sometimes these decisions just come to us, and we’re left holding the expense of it.”

Coastal Legislation All three panelists discussed how their company’s are responding to the latest coastal regulations.

Creedon said that from the stand-point of commercial lines, “we do have capacity for new business. We’re not taking any specific actions on the renewal book. In general, I’d say we’re managing it through deductibles, de-pending on location, and that seems to be going well.”

“On the personal lines side, we do have our filings in, and they are un-der review. And it is a concern for us — that once all the filings are approved, we [need to] have the un-derwriting prerogative to manage our aggregation.”

Christiansen noted, “We’ve gotten to be a lot better at managing our ag-gregation over the last few years with the different models, but we went through a period of time where we had to evaluate very carefully all of our exposures in all the coastal states in

the Northeast. But, at this point and time, we’ve got our guidelines in place and we’re able to know exactly what our exposure is out there, so that’s helped us. When it comes to this type of legislation on the commercial side, we’ll continue to underwrite individ-ual accounts based on their steps to mitigate risks.”

Kennedy said of the new legislation, “It’s the law. We’re all going to comply. Period.” He added that from a philo-sophical standpoint, “Clearly a risk on the coast, looking at the ocean, is dif-ferent than one 25 miles inland. You know that; I know that; the insured knows that; the government knows that. Everybody knows that.”

Kennedy noted that although “some very well-meaning and well-intended legislation” has been put in place, what he sees for insurers “is the law of un-intended consequences. I don’t think it’s going to make the market softer, easier, more competitive or anything else. I think it’s going to make it more difficult to transact business for you and for your carriers.”

Making Market PredictionsSuzio asked the panelists to talk about whether they see a soft or hard market on the horizon, taking into consider-ation the economy, claims and other business-related influences.

Christiansen said, “I think we’re hav-ing a really good year as an industry this year. I think the companies will make a profit this year and maybe ex-perience some growth. There’s still some opportunity for rate this year and next year as well, although it probably won’t be the same — prob-ably in the single digits.” He expects to see a softening in the market next year. “Maybe not so much on smaller commercial accounts but definite-ly as the accounts get larger, and the premium gets larger, I think the competition will intensify.”

Creedon joked that, “historical-

Reprinted with permission from The Standard, Vol. 274, No. 12, October 24, 2014. Copyright 2014, Standard Publishing Corp., Boston, MA. All rights reserved.

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ly, as an industry, we can’t stand our own prosperity. As soon as we all get healthy, things start to go haywire.” He commented that “modeling has really started to smooth out some of the harder edges of cyclical movement in our business,” but added that com-panies are “going to have to be more precise; we’re going to have to con-tinue to get rate where we need it, to keep it where we need it, to not let ourselves be fooled by thinking there’s another hard market around the corner.”

Creedon predicted some firming in commercial auto over the next 12 to 24 months. “You look at the com-bined ratio country-wide — the industry is about 106 — with the low investment returns we have right now, that’s just not going to be sus-tainable. I think companies will be putting rate into that.”

Kennedy said that he is not convinced the differences between hard and soft

markets are necessarily all that rel-evant these days, particularly when “you can have a soft market and a hard market in the same state in different products. In reality, at the end of the day, each line of business in each state has its own set of dynamics.”

The Independent Agency ChannelWhen asked to discuss the inde-pendent agency channel, Creedon stressed that agents need to adapt with the times or risk being left be-hind. “You have to be out there, and be available where your customers want to be met, how they want to be met, when they want to be met. We can’t just expect that we’re open [for business] from 9 to 5 and when they come through the door, we’ll take care of them.”

Kennedy praised the independent agency channel, noting “everybody brings advice, but you bring choic-

es to that advice, and that’s the distinctive difference.” He did caution attendees about paying attention to “some of these forces on the horizon, some of these storm clouds that are coming at us.”

Citing dating from the Big I, Kenne-dy noted that from 2011 to 2012 (the latest available data), the independent agency channel’s share of person-al auto lines dropped from 33% to 31.5%. “I think it’s a very big signal on the horizon. I think we have to pay attention to how consumers want to be serviced and how they want to be thought about differently. Carriers have to use their technology in part-nership with you to figure out ways we can meet some of these emerging needs, so we can begin to stop some of this exodus. Many of us depend so heavily on personal auto for the success of our businesses, that if that changes, and we haven’t prepared or adapted our business plan to it, how are we going to survive?” ■

Reprinted with permission from The Standard, Vol. 274, No. 12, October 24, 2014. Copyright 2014, Standard Publishing Corp., Boston, MA. All rights reserved.