By CYRIL TUOHY, managing editor of Risk & Insurance®
In dumping its outdated product-segment approach and replacing it with a more modern customer-segment strategy, The Hartford, one of the most venerable carriers in the industry, has done itself and its middle-market and small commercial buyers a huge favor.
The changes come courtesy of Liam McGee, The Hartford's chairman, president and CEO, who took over last year after former CEO Ramani Ayer left following huge losses in early 2009 in the wake of the financial crisis.
"The new go-to-market organization will allow us to better capitalize on our competitive advantages," said McGee, in a statement following an investor presentation April 1 in New York.
Those advantages are a large and growing customer base, a diverse product portfolio, and a huge distributor network made up of tens of thousands of agents, brokers and advisers.
Buyers in search of a group benefits plan, for example, will no longer have to trudge from the property/casualty aisle to the life aisle, as was the case in the past. Buyers will be able to do their one-stop shopping in the same department: the company's commercial markets segment, which includes specialty lines.
The changes should come as a relief to small business owners, larger-company buyers, and agents and brokers fed up with getting put on hold by the call center, only to be transferred to yet another silo to which they have to repeat themselves.
Juan Andrade, president of The Hartford's commercial market segment, in a phone interview with Risk & Insurance®, said the carrier's approach to the small and middle market "would become enhanced" in the wake of the changes.
Brokers and buyers will find dealing with The Hartford easier than ever before, said Andrade.
"Now that we have the group benefits unit joining the property/casualty organization, we're going to become a formidable force as we're combining two strong distribution organizations--organizations with a total of 18,000 distributors around those sets of products," he said.
Middle-market commercial insurance buyers or chief financial officers with purchasing responsibility representing smaller companies won't have to worry any longer about navigating silos separating workers' comp, Family Medical Leave Act benefits, and long-term and short-term disability, said Andrade.
Grouping property/casualty and benefits into one new organization made sense from a business standpoint, said Andrade, as about 70 percent of The Hartford's agents and brokers who sell property/casualty products also sell benefits products.
"At the same time, about 40 percent of the benefits premiums come from agency base, so there are a lot of synergies between the two groups. So it made sense to group them together," he said.
Andrade added that the changes would result in more coordination and a more "systematic approach to the marketplace."
McGee said in his presentation that the company was pricing new business to achieve a 13 percent to 15 percent return on equity.
The Hartford does business with about 1 million commercial customers, or about one out of every six business in the nation. In addition, the firm has about 18 million consumer customers.
About 8,000 commercial property/casualty agencies and 10,000 benefits brokers and consultants distribute Hartford-branded insurance products and benefits services around the country.
"The main thing you hear is that the distribution channel wants customers to be able to buy multiple products from the same company," Andrade also said. "In the past it was very difficult for us to offer such an integrated products solution."
April 8, 2010
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