Agency Checklists has written several articles about insurtech and start-ups that intend to disrupt the insurance market. Most of these companies seek to disrupt the independent agency distribution channel through Internet-based marketing and underwriting.
Recently, we learned that a Massachusetts agency-based carrier, Bunker Hill Insurance Company (“Bunker Hill”), is exploring an innovative program that simplifies the marketing and underwriting process for homeowners insurance.
Bunker Hill’s new president, Bill Martin, was kind enough to give us some of his time to talk about the company’s focus and plans under his presidency for expanding its homeowners market share through innovation in coverages and offering insureds and agents an enhanced interface.
Thank you for taking the time to discuss Bunker Hill’s new initiatives.
You’re welcome. I’m happy to bring your agency readers up to date on some of the exciting things that Bunker Hill is developing for the homeowners market.
Could we start with a little about the history of Bunker Hill?
Bunker Hill Insurance is a home insurance company serving Massachusetts and Connecticut and is an entity within the Plymouth Rock Group of Companies.
As the home insurance brand in Massachusetts and Connecticut, Bunker Hill was built to provide our independent agents with a property insurance option that delivers the same service and financial strength as Plymouth Rock Assurance does on the auto insurance side.
What is your own personal history with Bunker Hill? How long have you been with the company?
I joined Bunker Hill in September 2016 after working at Bankers Insurance Group as their president. At Bankers Insurance Group, I oversaw the expansion of the company’s homeowners and business-owners lines, as well as managed a warranty program and a life insurance program. Before that I worked with Farmers, Travelers, Progressive and three start-ups.
How did you initially get into insurance?
My first job was with Progressive, and within my first three years the company doubled in size twice. The growth rate had both employees and adjusters sleeping on their desks in order to get things taken care of. They were inventing new ways of approaching the auto insurance business and empowering lower level managers to do what it took to create a good consumer experience. We have embraced and expanded upon some of those culture elements at Bunker Hill.
Could you tell us about some of the positions you have held before arriving at Bunker Hill?
At Progressive, I moved from a management trainee up through the ranks as Assistant Product Manager, Product Manager, and Senior Product Manager. I then joined Travelers as a Regional Pricing Officer, which was its first foray into product management in the late ’80s.
From there I started my own company, Agency Insurance Company of Maryland, where I was the Division President. I also put Great American’s Truck Insurance Division, a transport insurance company, into the auto insurance business, and served as the Chief Marketing Officer. After Great American, I joined North Point as Division President for its auto insurance business in California. I joined Farmers Insurance in 2002 and was steadily promoted — eventually becoming Senior Vice President of Auto and then later Senior Vice President of Marketing. After ten years with Farmers, I left for Bankers Insurance Group where I was President for five years.
And now Bunker Hill. Could you tell our readers how big Bunker Hill is in Massachusetts?
Bunker Hill is currently approaching $60 million in Massachusetts and Connecticut homeowners insurance premium.
What insights do you have about the Plymouth Rock Group and Bunker Hill after your first year as Bunker Hill’s CEO?
It’s a very innovative and smart group. We have probably the most intelligent approach to insurance that I have seen in the industry as well as the most intelligent, on average, group of people running an insurance carrier I have ever seen.
The Plymouth Rock Group wrote and managed $1.2 billion in premium in 2016. Despite our size, we remain nimble and open to exploring different approaches to the business. We have been able to come up with innovative products and services. One example is Plymouth Rock’s Crashbusters® vans, which Plymouth Rock piloted long before some of the bigger companies adopted it. We’ve also been successful entering troubled auto insurance markets and providing solutions to agents and other companies that want to head in a different direction.
One recent venture is the expansion of our homeowners insurance business. We have a very different product, which is about as simple to use as you can make a homeowners insurance product.
When we take risks as a company, we are smart about it. We measure it. We are prepared for the things that can go wrong and we know exactly what we will do if they do go wrong. And truthfully, homeowners insurance could use that kind of attention.
On the whole, we as an industry have created a process within the independent agent channel that is complicated for a consumer looking to purchase home insurance. It takes too long to quote a homeowners policy and it costs too much. And then a company often does not provide the rate quoted. Time and again, the application process is reduced to a long series of “are you telling me the truth?” type of tests. That experience is a terrible way for a customer to spend hundreds of dollars purchasing a homeowners policy.
Our goal is to earn the same share of homeowners business from our agents that Plymouth Rock Assurance has earned from agents on the auto insurance side. That is our number one initiative – Bill Martin
Could you tell us more about this “idea of a different approach to homeowners insurance?”
Right now in Pennsylvania, Plymouth Rock is piloting a new approach to homeowners insurance. It’s a product that allows consumers to get a rate by simply providing their name and address. With this information, Plymouth Rock will provide a bindable rate followed by the option to go right to a coverage discussion or a purchase decision. And should a customer like the coverage package, which is a little bit more generous than the average coverage package, the agent can bind the policy. That’s it. You’re done. We issue the policy.
This allows independent agents to focus on advising their customers on proper coverages, rather than the elements of how to set the rate. Our process essentially eliminates time that agents spend on all the knock-out and cost estimator questions.
Do you see this product coming to Massachusetts?
I do. The response from the first set of agents in Pennsylvania has been so positive that we believe just changing the purchase process will make a big difference. I’m excited to eventually bring it to Massachusetts through Bunker Hill.
There are a couple of other companies playing with the speed of quote and bind, but those companies do not have quite the size, capital and financial strength, and service departments that we have here at both Plymouth Rock and Bunker Hill. We offer agents and customers the benefit of larger companies they can depend on, coupled with the innovation that some smaller companies are bringing to market.
Some Massachusetts agents have told us they are emphasizing selling homeowners insurance more so than auto.
It is really good to hear an agent say that. There is always a churn of shoppers out there for auto insurance. Somewhere between a fifth and a quarter of drivers shop for auto insurance every year, whereas maybe 10% of homeowners shop for home insurance and it’s usually because of some trigger event, like they’re moving, or they had a claim and they weren’t satisfied, or they’re refinancing their home. That fits our independent agent’s sweet spot, because they’ll know whether a customer may be ready to shop their home insurance.
Agents can say, “Does your policy offer identity theft protection? Does your policy offer a systems warranty? Does your policy offer Internet of Things?” And that’s something that the customer really appreciates.
The agents will always deliver value, meaning the service plus the price, rather than the price alone.
Where do you see Bunker Hill heading in Massachusetts? Are you focusing on growth?
Yes. Our goal is to earn the same share of homeowners business from our agents that Plymouth Rock Assurance has earned from agents on the auto insurance side. That is our number one initiative. After that, our goal is to grow our home insurance business. We believe the path to do that is to create a product that our customers are going to like, and then help our agents market that product.
Do you offer credits for insureds who have auto and homeowners insurance through Plymouth Rock and Bunker Hill?
Yes, we offer a companion discount on Bunker Hill home insurance if you have an auto insurance policy with Plymouth Rock Assurance.
What do you see as the biggest issue as to why agents have not looked at selling these products in tandem for Plymouth Rock Assurance and Bunker Hill—the auto product with the homeowners product?
Well number one, we have been very careful about what homeowners business we will write, rather than trying to find a way to write it. We know there are ways to accommodate different kinds of business and we are introducing those methods. Sometimes you price for it. Sometimes you make a policy adjustment. Sometimes you accommodate a certain type of risk because you have a loyal customer.
The second reason is pricing. We haven’t always been competitive compared to what Plymouth Rock Assurance offers its auto customers. But, we are now well-priced for the same type of customers.
Finally, we needed to give people a reason to come to Bunker Hill, rather than any of the other larger national or even statewide homeowners writers. In that respect, we have been making improvements to our product line, and to our A.M. Best rating and financial strength, in order to meet those goals.
Some of the things you will start to see from us will include expanded coverage packages, which will make their debut toward the end of this year. These include some cyber liability and appliance warranty coverages. We also have broadened our appetite to include coastal risks and monoline home risks, and we have matched it with a competitive rate with multiple tiers for different types of homeowners.
Is the homeowners appliance warranty offering something new in the marketplace?
There have been companies that have offered a specific appliance warranty for the purpose of getting an extended service contract, but it is not widely offered.
Could you expand on each of those two coverages on how they flesh out the homeowners policy?
Well, the first step is pretty simple in the cyber world, and that is to protect your online presence from identity theft, theft of financial information and so forth. So, we are seeking approval to provide some coverage for that.
On the appliance coverage side, this is a part of our strategy to offer customers a broader set of coverages to help with home ownership needs rather than just the catastrophic situations that a general policy covers. The average homeowners policy over the last 15 years has doubled in price. This has been in part because the pricing for homeowners policies over time was low for the risk that was taken and the risk it was paying out. So, there’s an adjustment that’s been made in the market. Companies have raised rates, they have restricted coverages, they’ve introduced higher deductibles on average like higher wind deductibles and exceptions and exclusions that weren’t in the policy 15 years ago.
Our philosophy is that if we offer some of those coverages back to our customers for the maintenance layer of home ownership, there will be more of a commitment to Bunker Hill as a good servicing company.
The cyber coverage? Are there things like coverage for people that lose their information from Ransomware or something like that.
We are introducing a specific endorsement in December with additional coverages that we will release in 2018. But yes, we are seeking to provide some coverage for ransomware, as well as other viruses or events that could damage your computer.
What about the growth of the “smart home” through the Internet of Things? Do you see this affecting the homeowners policy?
It will in a couple of ways. Right now, Bunker Hill has relationships with a few different smart home appliance providers and we are looking for more. One is with a company called SimpliSafe. It is one of the more widely distributed suites of products for smart homes. If someone insures with us, SimpliSafe gives the customer a starter packet and they will allow customers to see whether these are the type of devices they might need.
As for the Internet of Things in the home, customers buy these products because they value the product, not just because of potential insurance benefits. As a result, we find those customers not only are better customers, but we believe that at some point later on, the data that’s provided by these devices may help make their homes safer.
At the very least, when a homeowner gets notified that the washer machine is leaking, they are going to do something about it. Only five years ago, there was nothing that would call your phone and say your dishwasher is leaking and that your house would flood. Right there you can see the loss control benefits from something like that. We can see the benefits of insuring somebody who cares about that kind of loss control.
Are you planning to appoint more agents?
Our field team is always open to talking with agents who want to commit to representing Bunker Hill. We look for people who are going to make a larger commitment to us and know what we are doing, immediately when we do it. So, that is the kind of commitment we look for. As for number, we don’t have any specific initiative to expand the number of agents, but I see new appointments for Bunker Hill frequently.
What we are really seeing though is a lot of our long-term auto agents beginning to produce a lot more for us and we appreciate their business.
Our interview wouldn’t be complete without a question about insurtech. What are your thoughts about insurtech start-ups, the competition they are creating for more established carriers, and their viability within the insurance marketplace?
Well the most important takeaway from the rise of insurtechs is that they are breaking new ground for carriers. In the traditional industry, we ask for things from regulators and then wait to see if eventually they might get comfortable with the idea or proposal. In comparison, insurtech firms are very bold about asking for things and getting them. As a result, we see opportunities to do some of the things they do.
For instance, insurtech companies are doing a great job with making insurance paperless. The average customer of almost every other industry does not use paper. Yet, here in the insurance industry, we still are obligated to send a paper cancellation notice. Insurtech firms are pushing back on that and are taking some of the flack that we could have taken had traditional carriers pushed this issue more aggressively. So, in that respect, these start-ups are doing us a service.
There is a major issue with insurtech start-ups though, and that is, can a company with $10 million of capital truly survive a major hurricane? We hope these companies get bigger and stronger so they don’t leave the rest of us in the industry with black eyes because they went out of business.
To be clear, I am not saying any of these insurtechs will go out of business. They might have a good way of managing their catastrophe exposure. We certainly have gotten more sophisticated with that. But, at the end of the day, who is a customer going to be more comfortable with to protect their assets? A proven company like Bunker Hill? Or brand new start-ups?
...Bunker Hill has created the easiest insurance buying experience we can with a product that is inherently challenging
Based on your views about the rise of insurtech, what are your views about the place of the independent agency system going forward?
The irony is that a lot of the insurtech companies are thinking they are going to save money by getting rid of the agent. So far, however, you haven’t seen that in any of their balance sheets. These companies are actually spending more per customer than the companies that use agents. If, at some point, they reach a more efficient level, it will be because the customer is giving up something that they get from an independent agent.
Now, however, agents are in a position to lead their customers as these new inventions get put in their hands. I’m not sure there is a better delivery system to explain the difference between Bunker Hill and another company, like State Farm or GEICO, than an agent. State Farm and GEICO are good companies and they offer a lot of benefits. But if you want to describe the specific difference, most customers won’t be able to figure that out for themselves. They will need the advice of an agent. So, I think the agents are in a better place to deliver on innovation than any other distribution channel.
Where independent agents really need to assert themselves is on their ability to offer their clients services that the customer cannot readily get themselves. Most customers can do comparative rating on their own, often online, so that isn’t a real value-add for an agent. Rather, agents need to come out and say, “I’m offering you coverages that a particular company does not offer. I’m offering you advice on what to buy that a particular company does not offer you because you have to do it yourself. I’m offering you the ability to outsource the insurance buying experience.”
In my opinion, outsourcing the process of buying insurance is very viable, even for a single insurance buyer. For somebody who is now buying a home, or life insurance policy, or second car or running a business, that service becomes immensely valuable to them.
Do you have any specific advice on how agents can better market themselves?
I think it is important that independent agents get the word out. They need to do a lot more outbound marketing.
One of the things that I want to do for the independent agents of Massachusetts is to tell them exactly which customers in their marketing footprint could save money with our product. We want agents to use our data and our experiences so they know who it is they are most likely to be able to capture from a competitor company.
For example, in Pennsylvania, with Plymouth Rock’s new pilot program, we can tell agents the addresses of residents for whom our rate is competitive, within a five-mile radius of their agency. We can then tell them, within that group of people, what the characteristics are of the ones, or which ones specifically, are most likely to take their phone call or respond to their piece of mail. We are essentially giving our agents the tools they need to market to the people who could most benefit from their services.
If this experiment works out well in Pennsylvania, Bunker Hill will be coming to Massachusetts with a list of two or three hundred thousand customers we think could benefit from our products as well as looking for those agents who want to market to those customers.
Is there anything else that agents should know about Bunker Hill?
I think the two big elements to remember are as follows: The first is that Bunker Hill has created the easiest insurance buying experience we can with a product that is inherently challenging. The second is that we are actively trying to bring the power of big data to our agents in order to give them a competitive edge.
Will there be an added cost to agents for this service you are going to provide them with?
There is no added cost for this service; it is part of the benefit of working with us. We are giving our agents the tools and access to big data to help them succeed.
Again, thank you for the time and the insights into Bunker Hills’ new focus and initiatives. Is there anything we missed?
I have to compliment you. There are no publications similar to Agency Checklists in the states in which I have previously worked. For example, in Florida, there are at least three dozen local start-ups in the property insurance business, however, there are very few groups that are reporting as in-depth about the local carriers the way you are here in Massachusetts. And reporting a little bit on those domestic Florida insurers, just a little bit, in the depth that you guys report on the domestic insurers in Massachusetts, would really help the agents there decide who to commit to and who not to because there’s a huge difference in quality of carrier and huge differences in approach. So, I thank you for doing it for the Massachusetts agents.
Thank you very much for that thought. Publishing every week does take a lot of time and work. Knowing that what we are doing has value for our readers means a lot to us.