Newsletter Sign-up

By CYRIL TUOHY, managing editor of Risk & Insurance®

Editor's note: In February, Managing Editor Cyril Tuohy talked with Timothy J. Szerlong, president of worldwide field operations at CNA. Szerlong is in charge of distribution management across two silos (insureds and agents), six U.S. zones, dozens of branch offices and across excess and surplus and wholesale lines. He was one of several new hires under CEO Thomas Motamed, who has turned around a venerable property/casualty carrier, in part by focusing the company on serving the risk management needs of the middle market.

A: We surveyed our producer network in 2009 and found consistency and "ease in doing business" among the most important characteristics to be demonstrated by any insurer. We also found that we were not faring well against that measure. My personal discussions with producers, upon my arrival, further confirmed that our appetite and scope of product offerings were not widely understood and we were a difficult company to navigate.

At the same time CNA was also recognized for several product strengths. These included our construction segment, with emphasis on our commercial affiliation market (CAM) programs. Another was HealthPro, where we offer a wide array of products. It would often be said that, if we could perform as well in other segments as we do in these, we'd see lots of opportunity. Our strategy is to do just that.

Q: What exactly did you find when you arrived at CNA from Chubb, where you'd been for 35 years?

A: As I mentioned, when I joined CNA, we were viewed as being somewhat inconsistent. That said, we have a number of long-tenured customers that I believe have found value in our service and overall performance in a number of key areas. There are also other areas where our interest in a business segment changed based upon adverse performance. Any market that changes its posture or retreats from business creates an unfavorable perception. We have to overcome some of that. Perhaps the greatest apparent change in dealing with CNA today is that we are more consistently selling our product offerings across the entire enterprise. I believe there are a number of producers and customers who are being introduced to additional CNA product offerings for the first time.

Q: Why is orderly and consistent distribution so important for CNA? And why is it so important for insureds?

A: Our strategy must address how we respond to our producers as well as to our insureds. We are not in the direct selling business; instead, we fully support the value and expertise that agents and brokers provide to customers. At the core of our operating strategy is the belief that strong, effective operating relationships with the producer are key to CNA's success. The difference in CNA today is that we support that through a stronger field network, which provides producers more access to knowledgeable people with the authority to make a decision. We believe the producer needs direct access to an underwriter who can act as a trusted advisor, understands the needs of that specific producer, and has an appreciation for the local market and the territory. We find many of our competitors are moving in the opposite direction with a more centralized operating model relying on e-mail and telephone as their primary means of communication.

Conversely, we've created many new positions at CNA with over 100 new field positions added in the last year. This shift has enabled us to increase our decision making with more than 90 percent of underwriting decisions made at the branch level. Included in this group are a number of specialty underwriters. Historically, our specialty business was sold primarily through the larger brokers and MGU relationships; and, thus, our independent retail agencies were less familiar with our specialty products. Our engagement with this group has generated a significant increase in submission rates and policy counts in specialty in 2010.

Q: Speaking of decentralized units, CNA has opened a number of branches--Birmingham and Washington, D.C., come to mind, for example. It looks as if CNA now has branches in just about all 50 states.I don't recall CNA putting so much attention on the branches before.

A: Yes, we opened four new branch offices over the past year, and we're not finished yet. The new branches are part of our strategic intent to bring a strong underwriting presence closer to our producer network. It sends a very strong statement of our commitment to a business community when CNA plants a flag in that territory. While we clearly need to be attentive to the changes in the way in which business is done with the growth in the Internet and social networking, our producers place tremendous value on managing much of their business through local relationships. I anticipate that we will continue to build out our market presence in key territories while continuing to expand the underwriting representation in existing branches.

Q: What is the number No. 1 issue that insureds and agent/brokers are telling you they want from their insurance carrier?

A: The consistent feedback was that CNA is a prominent 100-plus-year-old franchise and our producer network has valued the relationship. At the same time, weaker underwriting performance reduced CNA's market prominence in recent years, creating uncertainty about appetite and a lack of clarity around how navigate CNA. We are committed to strengthening the value of what we offer our producers, consistently delivering quality response, and delivering better results. I've been very impressed with the array of product offerings in both specialty and commercial lines, and we have a top performing surety business as well.

Q: You were part of a big wave of hiring under Motamed, who himself was hired to turn around and grow the company.

A: Tom has brought an exciting new direction for CNA. Our strategy offers new challenges and opportunities for people who are attracted to a high performance culture and a company on the move. I have been encouraged by the strong interest from people that want to be part of this.

We have a number of talented people at CNA who have been given new responsibility; and, at the same time, we have attracted a number of highly-regarded people from around the industry. Our strategy is compelling as we strengthen our culture, become more sales focused and build a top performing company. While we've come a long way over the last year, we will not be satisfied until CNA is one of the first companies on the list of top players in the property/casualty business.

One of our initiatives over the past year has been to educate our field team on becoming more active and effective in the market, with the knowledge to not only sell the products for which they are primarily responsible, but to solicit opportunities for the entire enterprise. We are also in the midst of implementing a much stronger sales and marketing platform to provide further technology support for the field underwriter.

Q: You were hired in part because of your expertise in field operations, which you developed at Chubb when you went to St. Louis in 1983. What is it about field operations that appeals to you?

A: I believe my field experience actually began as an underwriter at the very beginning of my career. After all, the underwriter is the key to what we do. The opportunity at CNA was quite compelling. What I have learned along the way is that a strong commitment to producers, supported by a strong and responsive branch network is the right formula to be successful. The excitement around our strategy to make CNA a distinctive, top performer in the business is apparent both internally and externally. We have not yet realized our potential and believe that we have the right formula to deliver sustainable success.

Q: 2010 was an important year for CNA as it sold its asbestos and environmental liabilities to National Indemnity. Does that affect the field operations that you head up in any way?

A: Sure, it affects us. I have mentioned the importance of consistency throughout our discussion, and the strength of our balance sheet has everything to do with sustainability. We have worked very hard to put any legacy questions behind us. We now have a strong balance sheet and addressing this exposure is extremely helpful as there remain industrywide questions about future impact of this exposure on the industry.

April 1, 2011

Copyright 2011© LRP Publications