Proving that staying true to your roots can bring forth sustained success, the A-rated Norfolk & Dedham Group has been based in Dedham, Massachusetts since its inception almost 200 years ago. Founded in 1825, the insurer has remained a steadfast supporter of its local independent agency partners here in the commonwealth, where it writes approximately 80% of its business emphasizing its local roots with its “locally grown insurance” tagline.
Since 2017, Joel Murray has been the President & CEO of The Norfolk & Dedham Group. As the insurer looks to a post-pandemic future with a new modern headquarters in its hometown, the rise of remote work, and the increasing consolidation of the insurance agency marketplace here in the commonwealth, he was kind enough to chat with Agency Checklists about his thoughts on what makes Norfolk & Dedham a different kind of insurer, and why he is still optimistic about the future of the independent agency system, as well as the insurance industry in general in Massachusetts.
Could you tell our readers a little bit about the history of Norfolk & Dedham in general and how it is involved the Massachusetts market?
Sure. Norfolk & Dedham was founded in 1825 in Dedham, Massachusetts and we are still located there. Subsequently, we had a company called Dorchester Mutual join the Group in the mid-90s, then Fitchburg Mutual joined the group in 2001. So, we brand ourselves as the Norfolk & Dedham Group, and it consists of the Norfolk & Dedham Mutual Fire Insurance Company, the Dorchester Mutual, and the Fitchburg Mutual. We sell products through each one of those entities and have a shared management team. We write 80% of our business in Massachusetts across both personal and commercial lines and are 100% committed to the independent agency channel.
How many independent agents does Norfolk & Dedham presently have in Massachusetts?
Right now, about 300 agents in Massachusetts. We also write in New Jersey and in New Hampshire. We have had a specialty Farmowner program down in Arkansas and Missouri that we will be transferring to another entity starting in beginning of 2022. So, in the next few years here, we are going to be looking at potential geographic expansion, but continue to be focused on primarily Massachusetts, New Jersey, and New Hampshire in the near term.
Based on the company’s Northeast concentration it seems unusual that Norfolk & Dedham would have a specialty program in Arkansas.
It was a Farmowner program that focused exclusively on poultry farms. It was about a $10-million book of business, it came to us around 2010 or 2011 through a relationship made with another company, and we have been running it ever since. Ultimately, we decided it did not fit into our future from a strategic perspective.
Does Norfolk & Dedham write in states other than the three you mentioned, Massachusetts, New Jersey, and New Hampshire?
Just the three at the moment. We are licensed in ten states on an admitted basis, and we also have thirty-eight states in which we are licensed to write excess and surplus lines.
Does Norfolk & Dedham actually write excess and surplus business in any of those states?
We do not as of yet. We have looked at programs periodically, and part of the appeal to have that option is for the possibility of geographic diversification of the organization, but at this point in time, we do not have any active programs.
How about yourself personally? Could you tell us about yourself and your career?
Sure. I grew up in an insurance family with a father, a brother, and a sister all working in the business primarily on the claims side of the business with significant time with Allstate Insurance. When I graduated from college, I joined Metropolitan Property & Casualty in claims, then proceeded to have agency experience at Hastings-Tapley and Electric Insurance before coming over to Norfolk & Dedham. I have been with Norfolk & Dedham for twenty-two years in a variety of roles. I started in an analytic role, then took on marketing responsibility and marketing leadership responsibility, and then, added other executive oversight responsibilities including underwriting and claims, and ultimately became CEO, just under five years ago.
You assumed the CEO role in 2017?
Yes. In March of 2017.
Since becoming Norfolk & Dedham’s CEO in 2017, what do you see as the most significant initiatives you and your team have started and developed since you took over?
We had a long track record of success when I took over from Tim Hegarty, the prior CEO and our current chairman of the board. We have had great continuity within the organization with that transition. Above and beyond building off those fundamentals, we continue to really invest heavily in talent, automation, and particularly our commercial lines capabilities, including middle market commercial lines. We have introduced a new billing system and also have built a new, state of the art Homeowner agency rating and processing system that will be released in MA in early 2022. We also have ‘de-risked’ a bit by exiting New Jersey personal auto, transferring our Farmowners book, and reducing exposure in our Assumed Reinsurance program, particularly in Florida.
What have been the biggest challenges and successes for Norfolk & Dedham since you became CEO?
Fortunately, our profitability and growth have been strong, and surplus is at a record high. The companies have had a great run from a profitable growth standpoint, with four of the past five years with combined ratios in the mid-90s or better. Our growth has been above industry average over that period of time as well, despite the de-risking referenced above. The biggest challenge during that timeframe is working through COVID and the dynamics it has presented, and that it continues to present even today. There’s no question, that is the top challenge. But there are other challenges as well; for example cyber risk to our business, to all business owners, and any corporation. Cyber is much more of a significant risk than what existed even five years ago. So, from a resource standpoint and the things that keep you awake at night, cyber is a clear and present danger for all businesses.
You mention cyber risks, Does Norfolk & Dedham write cyber risk at all?
We do. We work with reinsurance entities to offer their solution. So, it is our product, and it is fully reinsured. We offer inclusive, lower to midsize limit type coverages, the type of coverage appropriate for most of our business owners and homeowners. It is seamless from an agent’s perspective and from a policyholder’s standpoint.
Looking back through the last year and a half, what do you see as the main challenges from the pandemic that you have had and are still having?
I think we responded remarkably well. Our team, like the industry frankly, responded extraordinarily well to an unprecedented circumstance. We had spent a fair amount of time considering business continuity as an organization in advance of the pandemic but never imagined a scenario we faced.
We historically looked at business continuity from a physical risk standpoint. So, what happens to our operations if the building is shut down? If there’s a significant hurricane in Eastern Massachusetts and we cannot get to our office? Those are the types of things we spend all our time thinking about. Never did we imagine that we have to go 100% virtual, but our leadership team did an exceptional job having us prepared; for example, all our employees had laptops, and we were setup to handle meetings virtually prior to the pandemic. With that said, we were not really incorporating that in our daily business before, but obviously the pandemic forced us overnight to transform. Thank goodness for Zoom and Microsoft Teams, and the tools that allowed us to thrive.
Pretty much every aspect of our business had implications from COVID. So, we just tried to really be thoughtful, really stick to our foundations and fundamentals, tried to do right by our policyholders, our agents, and our employees. And again, everyone says this, but it is true, we put the safety and health of our employees first and foremost. So that is something we continue to do and continue to look at. Right now, we have employees coming in a couple of days a week. But working in a hybrid arrangement is something that I would expect on a permanent basis for Norfolk & Dedham.
Was there any reduction of workforce during the pandemic?
No. Fortunately, we had no reduction of workforce because of the pandemic. Premiums were impacted, I think there’s just less new business generation. So, our growth was not as strong as some prior years, but fortunately, we are able to withstand that coming off a solid prior two years and therefore did not see an impact to staffing.
Do you see any major transformation in the way the N&D will be doing business going forward because of the pandemic?
Well, I think the hybrid work arrangement is real. I mean, in the final analysis, we do believe in the collaboration and knowledge transfer that exists more effectively in-person. But there are clearly benefits to virtual work, allowing employees a little more flexibility relative to their own travel with less commuting time. We have significant engagement in our teams through virtual meetings; those work effectively, but the ad hoc experiences that one learns and develops in-person, we do not want to lose. So, we are trying to find the right balance to make sure we keep those, but still provide employee flexibility so it is an attractive place to work.
In terms of meetings, for example, we have done many virtual meetings with agents, which can be effective with less travel time but in my view lack the effectiveness of an in-person meeting. We also have conducted meetings with over 30 global reinsurers remotely instead of traveling to various locations. So, there is an efficiency to it, so I think it can compliment what we do, but it is, without doubt, harder to build new relationships virtually. You can nurture existing relationships, but I do think creating new relationships is much more challenging virtually than in person.
Where Norfolk & Dedham is heavily involved in the Massachusetts market, what have you seen change during your tenure as CEO?
I think we have seen more change in the Massachusetts market over the last two years than in any other time in my career, with the exception of managed competition in 2008. There is just tremendous change that is taking place in the marketplace primarily driven by agency consolidation as a result of the private equity capital entering our marketplace. Alternative capital has also impacted other areas in our business such as reinsurance and start-up insurtech entities.
For a company like Norfolk & Dedham to be able to succeed since 1825, we have continued to adapt and evolve regardless of circumstance. We need to ensure that there is an alignment of interest between N&D, our agents, our policyholders, our employees, external stakeholders, regulators, and rating agencies. Ultimately, we are aiming for a situation where everyone wins; where everyone feels there’s fundamental fairness in play. And that has not changed, just because everything around us has changed. So, although everything is evolving very rapidly, we feel that the ability to evolve yet have a long-term and consistent approach to the business still works. We are positioned well financially and are very confident that we can evolve and adapt and continue to be successful for another 200 years.
Besides Norfolk & Dedham, what do you see about the general outlook for the industry of Massachusetts? Are you optimistic, sanguine, or pessimistic about what lies ahead?
I would say optimistic. Despite the amount of change that is occurring in our economy, and with technology, and some of the other items I just alluded to, I think the market has been very stable, all things considered. The carriers we have here in Massachusetts are very strong competitors, and are high-quality organizations with high-quality leadership. I think that kind of stability provides great solutions for policyholders in the state.
You really have to look at this industry with a long-term perspective because of the inherent volatility in the business. As long as the organizations, regulators, rating agencies, et cetera, all have a long-term view of this business, the Massachusetts marketplace will tend to be very stable and strong for policyholders, consumers, and employees. I think that brings great value to the Commonwealth.
What changes do you see in what Massachusetts insureds will want or need in the future from their insurers?
The primary value proposition for insureds ultimately is financial security. With so much going on in people’s lives today, one could argue that more than ever, providing a financially secure solution to them is the most important thing. We must deliver on our promise to our policyholders – we need to provide them financial security. So, that is first and foremost.
I am sure numerous articles in Agency Checklists with other CEOs that have been interviewed talk about how the client experience now is not only measured versus other insurance companies, but also versus every other entity that a consumer works with, whether it is the cable provider, whether it is Amazon, whether it is an electric company. So, all of us at some level have a client experience and the disruption that is happening in all spaces is significant. Cable is a great example; I mean, there’s streaming services and radical change. It seems like 100 years ago, we were talking about Blockbuster video, now we are talking about disruptive TV.
So, every industry is subject to disruption, but I do think the insurance business gets a little bit of a bad reputation on our ease of use. This is a very complex product. It is a very sophisticated product. There’s a significant legal aspect since it is a contract with the policyholder. So, its ease of use is something that I think all organization are focused on and will continue to make advancements on. But I do think when everything is taken into consideration, the industry’s technical knowledge is a real benefit that sometimes gets lost in the headlines. I think the legal expertise that is provided by insurance carriers and their counsels, on behalf of the policyholders, is significantly understated. Agents also play a tremendous role in that value proposition. So, I think that policyholders want ease of use, financial security, and expertise. Things will continue to evolve rapidly, but ultimately, I think we are positioned very well in that regard.
You have mentioned several times Norfolk & Dedham’s dedicated support of the independent agency system. How do you see the relationship with independent agents developing or changing during the next five to 10 years?
Well, I think just as the size of agents changes so does the way carriers need to market and communicate with independent agents. As agencies get larger, the ability to communicate most effectively becomes more important than ever. Historically, you were able to get alignment of interest with your agency owners relatively easily, because they wanted to put their best clients with their best companies. They wanted to know, when push comes to shove, if their clients have a problem that the company was going to deliver. That has not changed, but the connection between the agency owner or the agency principal and the end consumer, it is just much wider now because of the pure scale of entity. So, I think messaging is really a significant area in which we need to evolve. How do we communicate most effectively with all the agency employees that are touching Norfolk & Dedham products at the agency office?
I think the fundamental nature of the relationship, though, does not change. Ultimately, we want to provide comprehensive products that provide easy to use solutions that appropriately financially compensate independent agents for their efforts and support. And I do not see that changing. We do not significantly invest in branding externally to policyholders. We market directly to an independent agent. I think that can still work; I just think that the way we go about doing it has to be much more comprehensive than what we have done in the past because of the evolution within the independent agent channel.
Where do you see the most opportunity for the Norfolk & Dedham going forward?
When you think about technology, you think build versus buy. We are a build shop, and with build shops, it can be a bit longer to come to market. However, with buy shops, it is challenging to scale your organization because you pay for click charges, and in addition technology advancements are occurring so rapidly that you really need to be able to continually modify systems based on the client needs which in my view is harder to achieve with an off the shelf system. At the root of our evolution here, I think all companies are technology companies, whether they want to be or not. And ultimately, our initiatives that are going to drive growth are going to be driven by technology solutions that are going to make it easier to use and faster to transact. Right now, we are settling claims within hours of receiving a claim. From a claimant’s perspective, we are right on par with what the national carriers would offer; we really cannot get any better than that.
In terms of product itself, we have to make our technology easier, faster and more effective for independent agents. That, to me, will drive growth more than any specific product strategy. We write a broad product line in Massachusetts: homeowners, personal auto, BOP, workers’ comp, commercial auto, dwelling fire, commercial package, and we think that provides great value for the agency channel. We are interested in trying to grow in all those areas, not just any one specific area.
Do you see any areas of insurtech innovation that you are going to be using in the future?
Of course. We were one of the first companies to work with Hi Marley. That has been an outstanding solution for our policyholders, and we have been working with them a few years now. Advancements in claims technology have been significant, from arial footage, remote adjusting, self-inspection and self-appraisal. The advancements that have been made in claims in our industry have frankly been dramatic. I think the carriers are doing outstanding work in that regard, and that does not get a lot of headline coverage as there’s so much focus on distribution that some of the advancements in service that occur because of technology, do not get quite as much attention. To service policyholders any time of day, how they want to be serviced, when they want to be serviced, where they want to be serviced, ultimately, that is probably the area where we’ll see the most advancement. Again, agents service policies exceptionally well, but when agents are closed, there must be continued investment in digital solutions providing service for consumers.
Norfolk & Dedham is presently having a new headquarters built where its prior headquarters stood. What do you see as the advantages of this new venue?
Our new building is going to have significant amount of space dedicated to collaboration. And we are big believers around here in iterative thinking; it is not one person’s idea; it is an iterative exchange of ideas that happens through exploration and collaboration that leads us to the best outcomes. So our new space, compared to the old one, is going to provide significantly more opportunities for employees to congregate, and brainstorm, and talk through business problems and create business solutions.
I think one of the advantages being kind of a midsize organization is that there are not any silos. We write accounts, we like to write commercial lines policyholders, but we also like to write their home, and their auto, and if they have a second home; we really believe in writing accounts. We do not silo personal versus commercial, versus claims, versus finance, accounting, treasury, and IT. We are truly an integrated organization, and we have to maintain that, and we have to leverage that. And I think the new building is going to create even more opportunities for us to maximize that cross-functional collaboration.
The building will have audiovisual technology that is going to support hybrid work arrangements: Hybrid meetings with agents or reinsurers. Naturally, the air quality is top of the line considering COVID. We are going to have the best environment possible for people to work in, with a tremendous amount of natural light in the new building.
There’s a concept called hoteling, in which people share space. We will not do that. If someone is working in the office three days a week, in the home two days, they will have their own dedicated space, they will not have to pack their things off to lockers. They will not need to worry who sat on their desk the day before and whether they were sick or not.
In general, where do you see the American independent agent system going over the next five to 10 years?
Well, I think the biggest challenge in our industry is talent. The demographics from a retirement standpoint in our industry are challenging. 20% of Norfolk & Dedham employees are expected to retire within the next few years, which is significant, even dramatic. I think the independent agency channel has some of the same challenges with replacing talent that retires out. I think the biggest challenge with this phase is, how do you continue to bring in talent, and train and develop talent, to be the next generation producers, CSRs, leaders. But the entrepreneurial spirit of the independent agency channel is significantly understated.
The independent agency channel has been supposedly dead for generations now, but it continues to thrive, it continues to adapt and evolve, and it will continue to do so. Technological solutions obviously are going to be more significant as part of their service offerings in the future. But that has always been the case, it is just different types of technology and maybe a little more rapid advancement recently. But I have 100% belief that the independent agency channel will continue to adapt and respond to the evolving consumer needs.
Presently what does Norfolk & Dedham offer in Massachusetts by way of products?
We write a full solution of property and casualty insurance: home, auto, dwelling fire, umbrella, businessowners, workers’ comp, commercial auto, commercial umbrella, and commercial package policies.
Are there any additional products and services in N&D’s pipeline that Massachusetts agents might wish to know about?
We work closely with reinsurers, large global entities, that are always looking to provide new product solutions. So, we continually evaluate a variety of products and how they fit into our portfolio. We continue to spend time and energy looking at flood and terrorism. There are different things that we look at that we continue to explore and are always possible in the future to release, but nothing imminent.
What is Norfolk & Dedham doing to develop a workplace that encourages DEI?
We looked at this really across the entire organization. We have had conversations with all employees on this topic. We have really been intentional and involved in what we are trying to achieve here. As a small organization, we do not hire a lot of people. A lot of the hiring we have done over the years, really had been driven by people’s networks. Our industry is not as diverse as it needs to be. And when you work off networks in an industry that is not very diverse, you are not going to typically attract more diversity. So, we are being more intentional in terms of trying to create relationships with various entities that help us source a new talent from a DEI perspective. We still look and hire the best candidate for the role, but just have been more intentional in go beyond our immediate network.
We have also improved diversity in our board with two new female directors brought in the past few years. Colby Hewitt and the marketing team deserve tremendous credit for ongoing efforts to create a more diverse agency plant. We have brought on four outstanding agencies owned by people of color this past year, and we hope to add more diversity into our agency plant. DEI is certainly something that is at the top of our minds, and there’s plenty more to achieve here.
Why do you believe that Massachusetts agents should see the Norfolk & Dedham as a viable and desirable option for placing business for their insureds?
Well, we are consistent yet nimble, have a long-term view of this industry, have intimate knowledge of the local market, and hire conscientious and talented people. We know we cannot be all things to all people, but as a part of a suite of companies that agents consider, having Norfolk & Dedham in their operation provides great stability of market, a broad product offering, all while working with genuinely caring and thoughtful people. That has real value. As a regional mutual company, we are more focused on a long-term view of this business as opposed to short term, or quarterly analysts calls or what have you and I think that does differentiate us.
If an agent is interested in talking about placing business with Norfolk & Dedham, who would they contact?
Colby Hewitt is our Chief Marketing Officer. Colby would be the point person for an initial discussion. He can be reached at firstname.lastname@example.org.