American Superiors Werner Kruck
BY G. BARRY KLEIN, CPCU, CLU
There may be no way to control Mother Nature, but this COO has implemented systems that can take what she dishes out.
It was quite an event for a company our size. Thats how Werner E. Kruck, COO of American Superior Insurance Company, assesses the impact on his company of Augusts Hurricane Charley, one of the more severe storms that have hit Florida in the last month or two. A relatively new insurance carrier (launched in 1997) and writing only personal lines property coverages (mostly homeowners and dwelling fire) and only in Florida, the carrier found Charley to be a significant test of both its capacity and ability to respond. Were like many of our own insuredsyou never know how good your insurance is until youre called on to use it. Fortunately, we had a strong, profitable year going into the hurricane, and we have great reinsurance and great reinsurance partners, so we came through it fine, he says.
That doesnt mean it was easy. With fewer than 50 em-ployees, American Superior put virtually every one of them on the phones to handle the 2,700-plus claims that came in within days of the event. We think we responded well to it, with remarkable teamwork, but we learned from it, too, Kruck continues. Were modifying some procedures to do even better the next time something like this happens.
American Superior is one of a cadre of carriers unique to Florida. Following an extended period of natural disasters and general rate inadequacy, personal lines carriers began either to scale back or exit the market. The Florida Joint Underwriting Authority (JUA), the market of last resort, began growing at an alarming rate. The Florida legislature responded with legislation that encouraged a new breed of carriers, called take-out carriers, which were given special incentives to take risks out of the JUA. American Superior is one of the more successful ones and today writes 80 percent of its $50 million in premium in the voluntary market.
Kruck has been in the personal lines side of the insurance business for his whole career. After graduating from Western Michigan University in 1977, he joined Foremost for a nine-year stint. From there, he went on to positions at AIG, Bankers & Shippers, Markel, American Modern, and Great American. Kruck held marketing positions in those companies, where, depending on whether or not he got the technology he needed, he always either was the best friend or worst enemy of the CIO, he says. At American Modern Insurance Group, he evolved into chief knowledge officer and then CIO. You cant do anything in this business without technology, he explains, and Ive always looked to technology for competitive advantage.
When privately held Amer-ican Superior brought in its new CEO, Pat Gallagher, in October 2003, Gallagher quickly hired Kruck two months later. With Krucks product development, marketing, and IT background, Gallagher gave him the chief operating officer position, including responsibility for IT. Gallagher and Kruck worked together at several carriers in the past, and Kruck knew and shared Gallaghers idea of a Web-based business in the insurance marketplace: Not just an insurance company that does business on the Web but truly a Web-based business, Kruck emphasizes. The difference? You can think of an insurance carrier as a conduit between
the risk-bearing capitalinvestors and reinsurersand the insurance-buying public. We want all of our constituenciesinvestors, reinsurers, agents, policyholders, claimants, regulators, and our own employeesto have access to all of the services and information they need. The Web enables the delivery of that.
To accomplish its goal, American Superior is working with BRT Systems to develop and implement a customized version of BRTs InsMgmt system. We had a staff of seven programmers when I started, but we quickly decided we didnt want to be in the application development business, Kruck explains. So, the insurer outsourced the day-to-day management of its existing system to BRT while BRT developed American Superiors new ASP system. We also co-locate our other applications at BRTs facility and outsource much of our other IT functions to BRT, which frees us to concentrate on our core business, he adds.
Even before full implementation, the new arrangement is allowing American Superior to write more business with fewer people and more control. When the full system is operational, Kruck says, it will allow the carrier to operate faster, with better information for all parties, and at a lower net cost. We want to make it so compelling to do business with us that our agents and policyholders wont want to go anywhere else.
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