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Slowly, carefully over the decades, Safety National, the national multiline insurance carrier based in St. Louis, Mo., has proven that while product expansion can reap rewards, it takes a strong, focused underlying philosophy to do it right.

More to the point, it becomes very obvious that to expand successfully into new property and casualty lines takes a combination of innovation and financial stability, not a "jump in, jump out" business model.

As Safety National's Gus Aivaliotis explains it, the past eight or so years represent one of the insurance industry's softest commercial insurance markets in history, making it a tough time to introduce a new product. But Safety National did just that at last year's Risk and Insurance Management Society (RIMS) Conference, when the company announced it was going to offer GL and auto coverage through its Large Casualty Program. Now, Safety National is sharpening the focus on those products with a special push to meet public entity customer needs.

"First of all, over the past decade we kept hearing that many of the customers who were satisfied with their large deductible workers compensation product tended to want similar programs for their GL and auto liability policies," says Aivaliotis, vice president, Large Casualty, Safety National's products group consisting of large deductible workers' compensation, commercial auto liability and general liability. "We also saw that there was a tendency to want a single carrier to provide coverage for all three major casualty lines."

Another critical driver was that corporate insurance buyers like the simplicity of dealing with a single carrier, especially because of the claims management area.

Dave Randall, Safety National's Public Entity underwriting manager, says the expansion of these products to public entity accounts, which constitutes a large part of the company's book of business, just makes sense.

"For our public entity clients, we will continue to deliver innovative, customer-focused solutions, but now it is for GL, auto and professional lines as well," Randall explains. "Just as we have with other lines, we identify market needs and have the ability to meet those needs."

Randall adds that this latest market focus is a natural for Safety National.

"In the excess workers compensation world, we have the largest market share for public entities, so why not GL, auto and other casualty lines?" he says. "We have had early success offering those casualty lines for the private sector, so it's a natural fit to expand those products to the public sector.'

"Plus, workers compensation is a very tough line to place with public entities, so if we already have the most challenging line for those customers, it makes perfect sense to bring these new coverages to those customers," he adds.

Of course, carriers consistently try to innovate and bring new products to market, but many of them fall short. Safety National, ever since it began writing excess workers' compensation coverage in 1942, has exhibited a consistent thread: With each new product line launch, success has usually followed.

"For many years, excess workers comp was the only product Safety National wrote," Aivaliotis says. "But over time, we have tried to expand our product portfolio into other underserved areas."

The first was its stand-alone, large deductible workers compensation product, introduced about 10 years ago, in large part due to the difficulty insureds were having gaining self-insured status from states. Another was the introduction of self-insured bonds for excess workers compensation customers. A third example of Safety National's entrepreneurial nature is its loss portfolio transfer (LPT) product. And as noted, its Large Casualty product launch came in January 2010.

"Over the years, we have had some pretty good success with our new products in several key niches, as well as some tougher markets," Aivaliotis says

In the short term, the large deductible workers compensation program success has paved the way for other opportunities to expand Safety National product lines.

"In every case, we execute the same demanding underwriting standards," he adds. "We take a very consistent approach to new products, very measured and delivered with the same care and financial strategy."

Perhaps the prime reason for the run of success with new products is that Safety National has always fostered a corporate culture that allows it to remain flexible when considering solutions for a customer's needs. Each recent product expansion is a fresh example of that flexible problem-solving ability and desire to meet client needs.

However, even with its track record of innovation and expansion, Safety National keeps its eye focused on the bottom line, Aivaliotis says, which means the company will never enter a new market with short-term thinking as part of the equation.

"The real focus is long-term profitability, having a sustainable book of business. Nothing we do is to generate short-term revenue," Aivaliotis says, adding that while other carriers are cutting back, Safety National has expanded by 30 percent over the past few years, and is A-rated by A.M. Best.

In the end, Aivaliotis says, Safety National has proven its value by doing what it says it is going to do. That may sound simple, but not every company achieves that goal.

"We are a long-term market and competitive at the same time," he says. "We believe that's a terrific value proposition. Now, we are bringing our latest products to the public entity market, where we hope to take our existing relationships on the workers compensation side and build upon them."

Whether it is cities or counties, schools or pools, Safety National offers a suite of products to meet those specific customer needs.

"It's a very crowded marketplace, but we believe we have the advantage of having built great relationships with our public entity clients," Dave Randall says.

Aivaliotis says the entry into the Large Casualty business has been a very positive move for Safety National.

"The loudest message that has come through is, as always, we are an underwriting company focused on being a long-term, stable market," he says. "Our management team, whose members average more than 25 years with the company, offers a willingness to be flexible and act quickly."

In the end, Aivaliotis adds, Safety National is primarily focused on sustainability--the hallmark of the company's seven successful decades serving the alternative risk market.

"Our success is about being 'responsive, but responsible,' " he says, "We look forward to expanding existing relationships with our public entity client base. We believe they will find some real solutions in the process, as they have in the past."

For more information, visit http://www.safetynational.com

(The above piece is part of our continuing Insights series designed to highlight key products and services to our readers. This paid-for Insights was written and edited by Risk & Insurance® on behalf of our marketing partner. Additional Insights can be found on our Web site at www.riskandinsurance.com/.)

March 30, 2011

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