CNA shares growth plans with PIANJ

In its latest sit-down with New Jersey carriers, PIANJ caught up with CNA at an exciting time in the evolution of this old-line agency company. Founded in 1897, CNA is the country's seventh largest commercial lines insurer and 13th largest property/casualty insurer. A new chief executive officer, Thomas F. Motamed, assumed leadership at CNA at the start of the year and is making his mark on the company's direction.

New leadership takes hold

PIANJ was fortunate to meet with Peter W. Wilson, president and chief operating officer of CNA Specialty Lines, as well as John K. Passaro, vice president at CNA's New Jersey branch, and Elaine Phillips, field sales specialist. Wilson heads up the carrier's specialty operations country-wide, having recently gained his current title and a corresponding charge from the new CEO to lead his area of responsibility forward.

Motamed retired in June 2008 as Chubb's vice chairman and chief operating officer, after CNA tapped him to assume its top executive post this year. In over three decades at Chubb, Motamed served in many capacities, including leadership roles in the field organization as marketing manager, branch manager and western zone officer.

"This was a very significant leadership change," Wilson explained. "CNA now is prepared to become even more externally focused-both on our agents and on the end customer. Tom [Motamed] is about growing our customer base. After 31 years at Chubb, he ran a winning company. He brings with him best-in-breed processes and experience with specialty. Agent relations and customer relations will be CNA's focus moving forward."

Wilson referenced Motamed's recent interview with Business Insurance (May 25, 2009), in which he discussed the company's plans: "The strategic plan he outlined ... is based on building on CNA's historic strengths, rather than any radical changes in approach.... While it acknowledges specialty business as the primary driver of CNA's growth, the plan aims to capitalize on opportunities in key industry areas to write business such as equipment breakdown, marine, property and umbrella coverage."

Motamed replaced Stephen W. Lilienthal, described by the business press as a "turnaround specialist," who came from St. Paul to take the reins at CNA in 2001. Under Lilienthal's leadership, Wilson recounted, "we refocused on underwriting, instilled discipline and reduced our expense ratio." In fact, CNA eliminated almost 2,000 jobs, restructured its property/casualty and life operations, and shed its variable life and annuity business, according to Dow Jones Newswires (May 2008).

Field force seen as asset to leverage growth

"Going forward, Tom is looking to Specialty to drive growth," Wilson explained. "If we have good local relationships already through our branch structure, it ought to make it easier to write more business. Quite a bit of specialty business will go through the field structure in the future. To this end, we'll be putting more underwriting authority and systems into the field, closer to agents. We are planning investments to make this happen." CNA has announced it will open five new offices in the United States this year.

Asked by PIANJ what CNA considers "specialty," Wilson elaborated: "It's basically what you would expect: nonmedical E&O, where we write coverage for lawyers, accountants, architects and other professionals; medical malpractice-we write in most classes, including dental, nurses and long-term-care facilities; public and private company D&O and related lines. CNA also includes its auto warranty business within its definition of specialty."

Getting the word out

"Sometimes, though," observed PIANJ President William R. Vowteras, CPIA, after hearing CNA's many offerings, "agents have a problem knowing all that our companies do. Sometimes we don't realize a company has a market for a risk we're looking to place, until it's too late."

"True," agreed PIANJ Past President Andrew Harris, CIC, CPCU, ARM, CRM, AIS. "The absolute worst is when we lose out to one of our own companies."

Vowteras' comment clearly rang true with the CNA executives, who have ramped up an agency outreach program to address just such a communication need. "We know this effort is essential to grow both top and bottom lines," Passaro noted. "We've got to be visible. Our underwriters are being directed to make a certain number of visits monthly. We need to be viewed as experts in certain areas, so we are looked to as your go-to market for those risks."

"Why don't you do what MacDonald's does: Ask, 'do you want fries with that?' " suggested PIANJ Past President Paul Monacelli, CIC, CPIA. "In other words, build it into your automation system, so when an agent writes a standard coverage for a certain type of client, the agent is prompted to consider other CNA products, maybe some that you tailor just for this sort of risk?"

Agents sometimes face the "conundrum" factor at some companies, PIANJ agreed. Even when producers know the company writes a certain type of product, there's a mystery about how to get this done. Monacelli complimented CNA on a recent product fair it held for agents. "It was tremendous, it educated all of us on what-all you do and it will pay dividends as it leads to discussion of specific accounts," he said.

Value to agents, clients

"It's a nice surprise when we learn a company can do another piece of the risk, the umbrella or what-not," agreed Anthony Bavaro, CIC, CRM, PIANJ Vice President. "It's good for our E&O when coverages mesh and claims are coordinated. It also can speed the quote process and simplify renewals. Another factor agents strongly consider is a company's overall claims-handling ability, both speed and quality. PIANJ's recent Company Benchmark Survey demonstrated this, when fairness and prompt settlement placed one-two in overall importance to agency principals."

Wilson explained that Specialty deals mainly in low-frequency, high-severity events and maintains the expertise to handle these complicated situations. "The more discriminating and thoughtful client will understand the value and will pay for this protection," he observed.

"It could help CNA agents if you provide marketing tools that use claims examples, especially severe ones that prospects can relate to. Make these a part of the actual proposal to illustrate the types of events the policy is designed for. This way, the producer has to review and present this material," Monacelli suggested.

Strategic challenges

Both sides agreed that competition is proliferating, driven by a price-conscious buyer. The agents said carriers remain quite aggressive in defending renewals. "No one is willing to shoot the first bullet," observed PIANJ Vice President Donna Cunningham, CPIA.

Asked about current strategic challenges facing agents, "It's a different world [compared to this time last year]," Wilson observed. "Whoever would have contemplated the things that have happened? Agents are dealing with a very fluid situation and paying more attention to the companies they do business with.

"You're managing your own expenses, trying to produce some growth, and managing increasingly complex risks," Wilson continued. "It's a challenge to keep productive and keep growing. A lot of people want to get into your space." On the carrier side, "we're seeing an influx of specialty markets now with no tail, no experience to speak of in these risk sectors," he added.

Passaro said the company is looking to grow its agency plant, while maintaining franchise value and "doing business with the right people." A long-term strategic concern for the company is whether an agency has a strong perpetuation plan, Wilson said: "Do the senior partners have a succession plan? Will they just go out of business? If they do go out of business, where does the account go in that case?"

Both agencies and companies wrestle with how to gain efficiencies through technology. Rated by its agents in PIA 's Company Performance Survey, CNA consistently scores well above the average for all companies on "good technology overall," despite its exclusively commercial-specialty profile.

PIANJ noted that Barbara Flanigan, vice president of business insurance at CNA, spoke at a program held in conjunction with PIANJ 's Annual Conference and hosted by ACORD and AUGIE. Flanigan discussed electronic communication for trading partners in the commercial and specialty-lines arena. ("Agents no longer ask, 'What is Real Time?' They're asking 'How can I maximize Real Time?'" Flanigan said.)

PIANJ closed by encouraging CNA to stay involved with the association and recognizing CNA's support for the PIANJ Women's Forum programs and gold host sponsorship at PIA's annual conference.

Representing PIANJ, in addition to Vowteras, Harris, Monacelli, Bavaro and Cunningham, was PIANJ Immediate Past President Gary C. Rygiel, CIC, CPCU, ARM, CRM, AIS.—Kiehl