John Donohue has been the President and CEO of the Arbella Insurance Group since its founding in 1988. In honor of the company’s more than three decades in the Massachusetts insurance industry, Mr. Donohue was kind enough to share his insights with Agency Checklists on the changes that have occurred here in the insurance industry during his tenure, how Arbella has navigated those changes as one of the top property & casualty insurers in the Commonwealth, and what his outlook on the future is.
The year 2018 marked Arbella’s 30th anniversary as a Mutual Company whose beginnings were here in Quincy, Massachusetts. As the CEO and co-founder of Arbella, you have witnessed a lot of changes over the past three decades. What do you see as the greatest changes within the insurance industry landscape in both in Massachusetts (& New England) during that time?
We have seen a lot of changes in Arbella’s 30-year history, but a lot has also remained the same.
Perhaps the biggest change began in 2008 when the Massachusetts Private Passenger Auto market became deregulated. The new competitive environment was great for both consumers and carriers. We were able to provide customers with more flexibility in price, product and coverage. But it also gave way to new entrants into the marketplace, specifically direct writers. This has had a tremendous impact on the independent agents as they work harder to compete for business. Other changes are due to the impact of technology and consumer demographics. The younger population who have grown up with technology has different expectations and different shopping habits.
Customers and consumers want information faster and more insurance consumers are more price-sensitive than ever. But, product offerings are complex, and it is the role of the independent agent to ensure that customers have the right coverage to suit their needs. This is what has remained the same. Technology is important. But we are in a relationship business. Independent agents provide much-needed value with their expertise and advice. It’s critical that consumers have a trusted advisor to walk them through the many coverage options that they need.
Arbella has been a strong supporter of the independent insurance agency system since starting in 1988. What has been your philosophy with respect to Arbella’s enduring commitment to its independent agents?
Since our inception, we have valued our relationships with our independent agents. Writing insurance is not a “one-size-fits-all” approach. An independent agent understands the complexity of the products we sell, the intricacies of knowing what to cover and the customers’ rights when handling claims. It’s important that agents have all the tools in their toolbox to make sure solutions are customized and personal for everyone. We believe insurance only works effectively when there is a loyal, dedicated expert to serve the customer.
More than 1,200 local, independent agencies in Massachusetts employ nearly 10,000 people. They play an integral role in the local community, contributing nearly a billion dollars to the Massachusetts economy annually.
Additionally, independent agents are great advocates for helping us manage the many legislative issues impacting our industry and customers. Arbella and our independent agents have stood side-by-side for decades to fight for consumer issues and consumer rights.
The Arbella Insurance Group’s independent agents also partner with the Arbella Insurance Foundation to generously give their time and donations to organizations that support families and individuals in need. Arbella’s agents know that giving at this level is important and enhances and strengthens our local cities and towns. Together, the Foundation and independent agents donate more than half a million dollars annually to local charities.
What type of opportunity do you see for Arbella and its independent insurance agent partners with respect to innovation? Do you foresee greater ease of business for both Arbella and its independent agent partners?
InsurTech startups have been getting a lot of attention in our industry, but Arbella is also always looking for ways to enhance the ease of doing business for our agents and customers. Fewer clicks to bind business and retrieve information is critical and being able to access data quickly is crucial. We have a number of technology enhancements in development that will have a great impact in this area. Also, last year, we introduced live chat to our agents and customers and it has made a difference. We will continue to deliver technology enhancements to our customers so we can reach them how they want us to, and our Chat feature is just a first step. We have some excellent projects underway which will help to reach customers faster in our claim area and in customer service, without impacting our high touch service which we are known for.
Do you foresee major changes in what insureds will want or need in the future?
Technology and other industry trends will continue to progress and will create new challenges for our customers and our business. There are new exposures and new coverage areas to consider. One example is cyber protection. Arbella was one of the first to introduce cyber protection to individuals and businesses through Home Cyber Protection and Cyber Pro respectively. Our main goal is to protect customers in the event of a cyber-breach. We work closely with our independent agents to make sure they are educating consumers on ways to protect themselves against potential threats. Arbella’s personal cyber product features an innovation that provides coverage assistance in the event of cyberbullying.
Arbella is also doing its part to emphasize the importance of being energy efficient. We recently announced a new partnership with Mass Save®. We are now offering a discount to our current as well as new customers who have received a no-cost home energy assessment within the past two years. Our hope is to encourage customers to make their homes more energy-efficient.
Arbella has developed a strong company culture, having been awarded a “Best Place to Work” for eleven consecutive years. Would you say this has been one of the secrets to Arbella’s success?
It’s not one thing that makes Arbella a Best Place to Work Company, it’s the many things we do that have an impact. Our strong company culture has been part of our core strategy from the beginning. Putting people first was central to the initial vision and that has led to Arbella’s success over the past three decades. Employees are listed at the top of our core values. We listen, we respect, we care and we hire people who fit these values. Our focus on total wellness matters. We have an onsite fitness, wellness, and nutrition center. We encourage employee volunteerism and support the causes that matter to our employees. We have an Activities Committee who infuse fun in the workplace. And, we have an Employee Service Council made up of front line employees who provide us with feedback on how we can improve service delivery to both agents and customers. In a tight labor market, we have had excellent success attracting and retaining employees. We attribute our low turnover rate, currently below 10% to all of these efforts. All of this, combined with our emphasis on employee development and internal promotions, are important to our culture.
What is your personal outlook on the state of the Massachusetts insurance industry – are you optimistic about what lies ahead?
I am very optimistic about the future of our industry. In spite of the heightened increase in M&A activity within the independent agency channel, along with new VC companies looking to invest, we consistently see that these new partners value mutual insurance companies and partners who listen, respond, are open-minded and flexible. Being local allows us to get to know each agency well. We emphasize this to all new partner agents. That is who we are and who we will always be. “Here. For Good.” is more than just a tagline for us.
To answer the original question about what has remained the same, Arbella has. We are a local company, supporting our communities, providing assistance to our customers, being a resource for our independent agents, being open, responsive, service friendly, flexible and focused on continuous improvements. Itis who we are. Buying insurance is more important than just a few clicks. Arbella and its independent agents offer important advice to ensure that customers are getting the right coverages. Consumers need to understand their options and make decisions based on what they need. This is where our independent agents shine and the independent agent insurance channel is strong. We’re excited for what lies ahead and we know we’ll be successful because we have remained true to our core values.