Insurance executives: Time to think creatively

What specialties will see the most growth in 2011?

Jamie Maguire: All areas of insurance will be challenged for growth in 2011. The insurance market remains over-capitalized as a result of a relatively light catastrophe season, and rates have fallen to the point where most accounts are unprofitable if moved for lower prices. The challenge for insurers and their producers is to realize this and act appropriately.

Tim Szerlong: I would say healthcare, technology and management and professional liability are likely to see better growth in the U.S. and worldwide. We also see opportunities in warranty and alternative risks. There's a real demand for products that address risks not covered by traditional insurance, from the cost of maintaining consumer and commercial products, to the impact of job loss, debt and identify theft.

Bob Rheel: Zurich has a very positive outlook for its programs business in 2011. We are actively seeking new, quality program administrators, as well as new program opportunities, either from program administrators we currently work with or from those that will be new to working with us.

We have strength in many areas of the program business segment and have proven historically that we can put together very effective coverages and services. While our existing portfolio of programs and appetite for new programs is broad, 2011 will bring a new focus on accident and health. Zurich sees a huge market in the accident space, and we will add capabilities to grow that area of the business in 2011 and beyond.

Where will companies see profits in 2011?

Szerlong: We expect that the specialty side of the business will continue to deliver profitable results. On the other hand, profit margins in virtually all lines are being compressed by the prolonged soft market, which we believe will persist into 2011. We also believe that calendar year loss ratios for the industry will deteriorate with less favorable reserve releases from older accident years. Overall, we expect to see companies protecting their margins in their best performing lines, accepting lower retention in challenging areas and focusing on opportunistic growth.

Maguire: See my response to the first question.

Are you seeing any industries or areas of business that you think will grow
in 2011?

Szerlong: We believe that healthcare, professional services, technology and education are essential industries that are already shaking off the impact of the recession. Construction, architecture and design, commercial real estate and retail continue to be challenged. Even in these industries, though, exposures seem to be stabilizing and prospects are improving.

Rheel: Despite the market pressures in North America, we see opportunities for growth in a number of targeted areas, including energy. We have a strong presence in various sectors of the energy industry including mining, oil and gas, utilities, power generation and alternative energy. We are committed to expanding our presence in the U.S. energy insurance market in 2011.

Another area for growth is in our manufacturing business. We understand the unique needs manufacturers face in today's challenging environment and have created products to help manufacturers proactively reduce costs by mitigating risks and coverage gaps.

We believe there is an opportunity to grow our international business, as we continue to see U.S.-based companies entering foreign markets or expanding in international markets where they already conduct business. Plus, the risk landscape internationally is evolving very rapidly.

Customers are asking for insurance offerings that not only cover their foreign exposures, but also help them better understand those exposures.

Zurich has been working around the world for more than a century and understands how to navigate risks in the global landscape.

Even though the challenges and pressures in the North America market have not let up, Zurich sees numerous growth opportunities in various sectors of the market. Energy, manufacturing and international are just three of the many areas where we see opportunities and we will be placing focus on in 2011.

Maguire: Per my earlier answer, growth will be hard to find next year. Companies that are growing will probably be making a mistake.

How has the Wall Street Reform and Consumer Protection Act impacted your business?

Szerlong: The law recognized that the property-casualty industry is already highly regulated, adequately capitalized and financially supportive of well-funded state resolution authorities–so there was little direct impact on the industry when the law passed. And since much of the act was left to regulatory interpretation, we are hopeful that subsequent rulemaking stays true to the intent of the law.

Maguire: There has been no impact on PHLY and we don't expect there to be any meaningful change in the future. This bill is designed to affect insurers that spend too much time doing things other than insurance.

How does your company's distribution strategy play into its 2011 growth plans?

Rheel: As Zurich continues to focus on meeting the needs of our customers, we realized to do this successfully, both Zurich and the distributors we work with need to have a strong commitment to support each other in order to support the needs of our customers.

At the beginning of 2010, Zurich activated a Select Broker location strategy that works to create new business with a set of broker locations where the brokers also want to grow their business with Zurich. We have approximately 720 select broker locations to ensure we are delivering the right service to customers and meeting mutual expectations to not only grow stronger together, but also lead the market. In the end, our goal is to best serve our brokers so we can best meet the needs of their customers and win their business.

Maguire: PHLY's distribution strategy fits nicely into the hard or soft market. We can throttle up or cut back as opportunities present themselves. We have national coverage through 47 offices and a large network of retail producers who provide a constant stream of business opportunities. Unfortunately, under the current conditions, it's gotten more difficult to find opportunities that are profitable for the long term.

Szerlong: The foundation of our distribution strategy is our relationships with approximately 4,600 independent agents and brokers. That really hasn't changed very much. However, in 2010, we made substantial investments at the point of sale–new locations, new people and new positions–to respond more efficiently and effectively to our producers. This has translated into an increased flow of submissions and new business in CNA's growth areas. Also in 2010, we put in place a new supplemental compensation agreement that provides opportunities for quarterly payouts and that rewards producers for profitable growth across the CNA enterprise.

Overall, our objective is to be a much more producer-friendly company. We want to be able to appeal to the agent to write specialty business as well as standard business, and that is best accomplished at the point of sale.

What are you doing differently to address the social media revolution?

Szerlong: For most of our commercial and specialty business, face-to-face conversations continue to be the main point of contact for building relationships, resolving issues and growing a book of business. We're evaluating how we can use social media to better connect with our producers, customers and business partners. We want to be where they are.

For example, recent tweets highlighted CNA products and services. Social media gives us another avenue for real-time, authentic communication and deeper interaction and we want to participate in that.

Sean Kevelighan: People don't instinctively regard the insurance industry as a leading voice in the social media sphere. The word “insurance” doesn't always convey how fast-paced, multifaceted and all-encompassing this industry truly is.

Zurich saw an opportunity to engage and change perceptions via different social media platforms through our Zurich HelpPoint Advocate campaign, which puts our industry knowledge at the fingertips of insurance customers worldwide. Take hurricane season, for instance. When a storm is approaching, insurance customers may have questions about how to best secure their property, but may not have the time to read a white paper. Or after impact, customers may need to know what number to call to report a claim and may not have immediate access to their documents to look it up. Zurich HelpPoint Advocate filters relevant, objective and timely information from industry leaders and risk management professionals to the people in easy-to-digest bites. Zurich HelpPoint Advocate launched a Twitter handle (@HlpPntAdvocate), a YouTube channel, and a Facebook page to connect insurance customers, industry specialists, media and other interested parties already active in social media. We also launched the ZurichNAnews Twitter handle to relay news about our North American operations and risk management tools in real time.

Maguire: PHLY would like to capitalize on the various social media platforms and is undergoing studies to determine the best products and groups. We are also looking at other value that can be garnered from the social media revolution and finding that brand awareness and employee recruiting offer the most benefits at this time.

Are you seeing any industries or areas of business that you think will grow in 2011?

Szerlong: We believe that healthcare, professional services, technology and education are essential industries that are already shaking off the impact of the recession. Construction, architecture & design, commercial real estate and retail continue to be challenged. Even in these industries, though, exposures seem to be stabilizing and prospects are improving.

Rheel: Despite the market pressures in North America, Zurich sees opportunities for growth in a number of targeted areas, including energy. We have a strong presence in various sectors of the energy industry including mining, oil and gas, utilities, power generation and alternative energy. We are committed to expanding our presence in the U.S. energy insurance market in 2011.

Another area for growth is in our manufacturing business. We understand the unique needs manufacturers face in today's challenging environment and have created products to help Manufacturers proactively reduce costs by mitigating risks and coverage gaps.

We believe there is an opportunity to grow our international business, as we continue to see U.S.-based companies entering foreign markets or expanding in international markets where they already conduct business.

Plus, the risk landscape internationally is evolving very rapidly.

Customers are asking for insurance offerings that not only cover their foreign exposures, but also help them better understand those exposures.

Zurich has been working around the world for more than a century and understands how to navigate risks in the global landscape.

Even though the challenges and pressures in the North America market have not let up, Zurich sees numerous growth opportunities in various sectors of the market. Energy, manufacturing and international are just three of the many areas where we see opportunities and we will be placing focus on in 2011.

Maguire: Per my earlier answer, growth will be hard to find next year. Companies that are growing will probably be making a mistake.

Where will companies see profits in 2011?

Szerlong: We expect that the specialty side of the business will continue to deliver profitable results. On the other hand, profit margins in virtually all lines are being compressed by the prolonged soft market, which we believe will persist into 2011. We also believe that calendar year loss ratios for the industry will deteriorate with less favorable reserve releases from older accident years. Overall, we expect to see companies protecting their margins in their best performing lines, accepting lower retention in challenging areas and focusing on opportunistic growth.

Maguire: See my response to the first question.