The Hanover is focused on helping its independent agent partners with offerings that deliver a higher level of service for preferred accounts
As the insurance marketplace both from inside and outside Massachusetts evolves to encompass not only independent agents, but direct writers and insurtechs, many insurers have decided to bifurcate their focus. As a result, these companies now offer an array of insurance coverage products to insureds both directly and through their independent agency partners. One insurer bucking this trend, however, is Worcester-based insurer The Hanover Insurance Group.
“Our successes are linked,” explains Paul James, The Hanover’s Zonal Vice President for the Northeast. “Our strategy is to only do business with independent agents, so we distribute our products exclusively through that channel. I like to say that our futures and success are linked with our agents; everything that we do as a company is with our agents in mind.”
As a result of this independent agency focus, The Hanover says it has the ability to do certain things that its competitors cannot.
“And that’s really powerful… as a result of our strategy we have a very high level of trust with our agents. We want our Massachusetts agents to be successful, and if they are successful, we are successful…”
The “mono-line” trend in Massachusetts
“We spend a lot of time really trying to understand our agents’ challenges, goals, and philosophies, and then align our solutions to help them succeed,” continued Mr. James. “Succeeding in Massachusetts has changed in the last decade as a result of managed competition.
Before 2008 in Massachusetts…[t]here were very few options for customers. When Managed Competition was released in Massachusetts, that allowed carriers to get creative with rates and discounts, and it also attracted some new direct writers to the Commonwealth and allowed them to gain market share.”
“As those direct writers have entered the market it has led to a mono-line personal lines strategy in Massachusetts…[as these carriers] primarily go after auto,” he contends. “Many customers now have their home with one company, their auto with another, and then any other insurance needs with a separate carrier also. In some cases, we even see autos within the same household split amongst multiple carriers.
Mr. James, however, sees this as an opportunity for The Hanover.
“We know that it is an insurance rule of thumb that the more lines of business you have with a customer, the higher retention, lifetime value, and customer satisfaction…Once a customer is that committed to the agency and the carrier,” he adds, “…they are less likely to disrupt the relationship, so it’s more important than ever for Massachusetts agents to be thinking about their books of business, and how much mono-line business they have.”
As a former independent agent himself, Mr. James intimately understands the many pressures his agent partners face in today’s competitive marketplace.
“Before being on the carrier side in sales and distribution, I was a Massachusetts independent insurance agent for fifteen years. I understand the challenges our partners face in today’s marketplace.”
Two new offerings to address customer needs
Speaking to the new complexities within the insurance marketplace, The Hanover has developed and launched two new offerings aimed at helping its agent partners better address the changing needs of their insureds and the desire to have a quick, easy and intuitive buying experience with respect to insurance.
The first offering is The Hanover’s Platinum Protection coverage. Designed as a total account solution; this new protection offers a first-of-its-kind “common effective date” for all policies on the account. Mr. James believes the common effective date will be a game-changer for The Hanover’s agents as it presents a unique opportunity to offer both a better way to serve their insureds while improving an agency’s efficiency.
“By permitting the creation of a “common effective date” for an insured’s multiple policies, we create a virtual package policy for the agency’s customer without any additional work on their part.”
“Our research suggests that about a third of independent agents’ business country-wide is account business with a [common effective date.] In Massachusetts, that number is more like 9%. What that means is 80% or more of independent agent business is vulnerable to direct writers.”
“…[F]or the customer that means one bill to pay, one time of year that they have to think about their insurance, and one number to call,” contends Mr. James adding that “…the retention, as a result, goes way up; so it’s good for the customer, good for the agency, good for the carrier…adding to the lifetime value of that customer.”
Hanover Platinum Protection is delivered through the newly upgraded quote and issue platform, TAP Sales.
Agents still have the option to issue mono-line or split account policies with The Hanover through our Connections policy as well. “Ultimately,” notes Mr. James, “we are very focused on Platinum, because of the common effective date and the results that we have seen across the country in terms of customer satisfaction and agency retention.”
Prestige is a new brand The Hanover has launched to cater to insureds with more complex insurance needs
In addition to Hanover Platinum Protection, the company has also has launched a new brand, Prestige. Available across all of The Hanover’s personal lines states, Prestige offers high-value coverage, customization, and flexibility to insurance customers with complex insurance needs.
According to data provided by The Hanover, a majority of households with home replacement cost values between $750,000 to $3 million are currently underserved in the marketplace. Also, many such insureds are paying for inadequate coverages or services due to the inability of insurers to customize a policy to meet their needs.
“We saw a tremendous opportunity amidst our middle-market competitors in terms of being able to offer enough of those additional coverages that appeal to that type of client at competitive rates,” says Mr. James emphasizing the fact that this market segment is really a unique space in and of itself and should not be confused with the high net-worth market.
For example, customers’ coverage limits can be adjusted to the unique needs of each insured as opposed to the usual locked in limits of most other carriers’ policies. This limit flexibility is often important to these type of insureds with respect to “…limits for other structures on a property, including a shed, fence or detached garage; or limits for contents and personal possessions.”
Mr. James says that a lot of time and effort has gone into providing a thoughtful coverage for this market segment. “We have invested a lot in this offering. We are trying to be very, very thoughtful from an underwriting standpoint, having people who understand that market, understand the types of questions to ask, how to underwrite the business properly. Most importantly, how to fulfill our promise at what I call the moment of truth – When there is a loss.”
The decision to create the Prestige brand is based on the results of many focus groups The Hanover has conducted to determine what consumers want over the past few years.
For those agents looking to learn more
Cambridge-based independent agency WT Phelan is a Massachusetts insurance agent using The Hanover’s new Platinum Protection Coverage for its insureds.
“WT Phelan and The Hanover share the same vision when it comes to personal lines. As an agency we only issue account business primarily and with the new Platinum coverages, we can line up the common effective dates with our account business which has been very successful for us retention-wise and production-wise.” – Jim Ramsey, producer at WT Phelan
Hanover agents looking to learn more about the particulars of each of these offerings can find information in the TAP Sales System or on the Platinum and Prestige pages on The Hanover website:
Finally, for those agents who are intrigued, but do not have an agency contract with The Hanover, Agency Checklists queried Mr. James as to whether The Hanover was looking to appoint more agents.
The insurer takes a selective approach to appointing new agents seeking out growth-minded, actively managed agencies. He specified that while there are no set parameters, the company takes a thoughtful approach to the appointment process in order to ensure that a potential partnership makes sense for both the agent and the insurer.
“I like to meet the agent, understand their goals, objectives, and philosophies, whether or not they’re growing, what their perpetuation plan is, how they view the future, how they write business. I then like to make a decision from there, because sometimes you could put a guideline out there and miss an opportunity because you didn’t have the full context,” Mr. James explains, concluding, “We are a relationship carrier, and we value the relationships with our agents, whether they are appointed or going to be newly appointed … so meeting them and understanding their operation, and being a true partner with them is how we determine whether or not we have a mutual fit.”