Name: Thomas A. Taylor
Occupation: President and chief executive officer of Amica Mutual
Insurance Co., which has its headquarters in Lincoln
Backround: Joined Amica’s claims staff in 1970, after spending seven
years at Kemper Insurance Co. in Providence. Became a senior assistant
vice president in 1986, executive vice president in 1992, chief
operating officer in 1994, and president/CEO in 1995.
Education: Marketing degree from Bryant College in 1963
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Age: 56
Family: Married
Residence: Swansea, Mass.
PBN: What are some of the challenges you face running a large insurance
company?
TAYLOR: The challenges are many. I’ve been in this business a little
over 35 years, 29 of those with Amica. In all my years of experience, I
have never seen a more ferocious, competitive environment than I am
seeing in this business right now. That is best demonstrated by the fact
that we are seeing, on a countrywide basis, rate wars, price wars. It’s
been largely fueled by capital gains from a long-running bull market.
There are companies that are drawing down those earnings right to the
bottom line, and they’re slashing rates to grow market share. One of the
real problems is this business hasn’t really been growing; we’ve been
moving business around a lot. We see new players entering the
marketplace, and they’re stealing business away here and there, so we’re
just trading paper across the table all the time.
Back in 1992 we began to develop a strategic planning process at
Amica, and we launched that strategic plan in 1993. Along the way, going
through the strategic planning process, we recognized that we really
needed to have some sort of marketing strategy. Historically, Amica has
been a very low profile company, we haven’t really been out there
pushing our name, trying to do much by way of aggressively growing. We
recognized that if we were indeed going to retain market share and grow
that we would really have to become much more visible. So we retained a
marketing consultant and worked with them for about nine months and we
came up with a number of strategic marketing initiatives. I never would
have believed years ago that Amica would be advertising on a countrywide
basis, and this year, 1998, we launched a massive advertising campaign:
television, radio, print media in the Midwest, the Northwest, and the
Southwest. These are what I would best describe as immature markets for
Amica; we’re present there, but we’re not really growing and we haven’t
really gained a foothold.
You’re traditionally a Northeast company?
We’re mostly a Northeast, East Coast company. When you really think
about it, that has its real threats because of hurricanes. We have a
catastrophe-prone book of business. To insulate Amica from all of that,
we needed to focus more away from the East Coast to areas where we don’t
have as much chance for catastrophic events to occur. Certainly we have
tornadoes and earthquakes and the like in other parts of the country;
but we want to spread our risks, we really need to spread our risks
across the country and to smooth out that whole book of business.
You’re trying to plant the Amica name in people’s brains basically, how
are you going about doing that? Are you using a cartoon character or
anything like that?
No we tend not to do hokey things. We’re a pretty conservative company
overall. (Amica is now working on a series of TV commercials.) They’re
tasteful commercials that would cater to the responsible driver, the
responsible homeowner. We try to get the message across at first that we
are the best insurance company you’ve never heard of. This series of
ads is also going to focus on ‘the company you want around, just in
case.’
We can be equally effective. I know other companies have found a way
to latch onto a particular character, whether it’s Budweiser with the
frogs or Metropolitan with Snoopy, and those things work. People like
them. We think we will be displaying some interesting commercials as
well.
How would you like to see Amica grow within the next couple of years?
Certainly our efforts these days they’re really focusing on four major
areas, first of all pricing. We’ve been working very hard over the past
three or four years or so in getting our pricing into a very competitive
position. We realize that today’s consumer of insurance is really price
sensitive. Unlike years ago where people would hang in with one
insurance company if the rates went up. They knew they’d eventually come
back down or they’d smooth out. Today’s consumer is going to jump ship
for a very small amount of money. We’ve been blessed with loyalty in our
customer base. We can boast about, in fact prove, that we’ve got about a
96 percent retention rate.
The second area is of course, once you get your pricing in place, and
you want to grow you need to develop the marketing strategy. That is now
in place and has been moving forward for a couple of years. We’ve
actually even been expanding our physical presence by opening new
operations. We opened in southeastern Massachusetts in 1995; opened an
office just outside Milwaukee; we opened an office in Indiana in
Indianapolis; we have a presence in Nashville; just opened up in
September in southern New Jersey. So we know that a physical presence is
important to market growth and we do have some expansion plans there.
So pricing, followed by marketing, followed by sales. Now we’re not a
high pressure sales organization, never have been and never will be. In
fact, our telephone sales reps are not commissioned. They’re there to
serve, they will take as much time as necessary to walk a client or
prospective client through a transaction. But we really want to ratchet
up our sales skills to get people to really deliver on the front lines
and convert those inquiries into written policyholders.
And finally, going forward, access to Amica through the Internet. We
need to be a little more diverse in our distribution methods. We started
as a company where you had to be recommended by someone, there was a
careful screening process. Well, we still like people to be recommended
to us. That has worked, it’s been our primary engine for growth. People
will recommend folks that they think are responsible people like them;
they’re not going to recommend somebody that’s going to be a clunker or
an embarrassment. So we’re nurturing that process, but we’re also
mindful that we have to have multiple distribution strategies. The
Internet is certainly going to be one of them, and this industry is
moving forward in that direction.
Do you expect Amica will grow X percent, or will gain X number of
customers?
Frankly right now if we could achieve 3 percent growth overall on our
auto line across the country, I would be a most happy person. The
competition is extremely ferocious.
There are a few mutual insurance companies that have demutualized, what
do you think of that trend? And is there any possibility it could happen
at Amica?
Let me answer the last part first. We are absolutely committed to
maintaining our mutual status. We’re owned by our policyholders, not a
group of stockholders who may, or may not be policyholders. Our singular
concern has been and will continue to be to act on behalf of our
policyholders. Stock companies are driven to increase the value of stock
for stockholders and that may, or may not necessarily augur well for the
benefit of policyholders.
I think the recent wave we’ve seen with regard to demutualizations has
been driven by a need to access capital markets, and make acquisitions,
and do all of those kinds of infrastructure building things that
demutualization will bring. But it also does something else too – and I
don’t think the public is terribly aware of it – is that in a
demutualization process, (becoming) a stock company really does enrich
some high-level individuals who run those organizations. And I’m not so
sure that’s the right thing to do.
I’ve heard it said that the mutual concept of doing business is going
the way of the dinosaur, and I’m not so sure I agree with that. There
are many a mutual company out there, and Amica is one of them, with
plenty of cash on hand, from ongoing insurance premium revenues, that
may not necessarily be interested in accessing equity markets or
expanding their operations and their product portfolios. I think
companies like Amica can continue and will continue to perform nicely.
At Amica our philosophy has always been that we don’t want to be the
biggest, just the best.
Have you noticed an impact on motor vehicle safety (as a result of the
American Insurers Highway Safety Alliance efforts)?
The insurance industry has really pulled together through trade
associations, Amica happens to be a member of the Alliance of American
Insurers. This is my year to chair that group. It’s an organization that
consists of about 300 property and casualty insurance companies. The
other competing trades are the American Insurance Association and the
National Association of Independent Insurers. We, through our lobbying
efforts on a state level, work very, very hard toward enforcement, such
as DWI (driving while intoxicated). We’re seeing the DWI level come
down; we’d like to see that happen in Rhode Island – get that down to
.08 (blood alcohol level) in ’99. We certainly do everything we can to
support every organization involved in highway safety. It is I really
think paying back some dividends; we’re seeing that right now in an
industry decrease in auto losses.
Can you identify any one particular issue that you think is a key
initiative of the Governor’s Insurance Task Force?
Well I can’t say that I can single out any one as being more important
than the other. One of the things that we (as an insurance industry that
is heavily regulated) feel is going forward very nicely, is the revision
of the insurance code of Rhode Island. It’s been a lot of years since
that’s been attacked. We have had people participating and revising this
massive document.
What are some things you want to see in updating the insurance code?
It’s really making it a much more contemporary document. There’s a lot
of cleanup stuff in there to make Rhode Island a very attractive place
to do business as an insurance company. The more we can do to facilitate
that process then the better off as an industry we are going to be.
We’re a clean industry; we bring good jobs to the state.
