The Hartford briefs PIANJ on launch of retooled Spectrum product

After 25 successful years, the Spectrum small business insurance product offered by The Hartford Financial Services Group has been updated. Rating and product changes should make Spectrum more competitive and easier for agents to use, while offering better coverage, PIANJ was told during a briefing on the New Jersey roll-out, planned for June 6, 2009.

The Spectrum changes kicked off a wide-range meeting between PIANJ leaders and The Hartford's Paul Vater, New Jersey regional vice president, and Clifford Leach, Esq., vice president for Government Affairs & Assistant General Counsel. Part of PIANJ's ongoing series of talks with companies represented by members, the April 22 meeting was initiated by PIANJ President Gary C. Rygiel, CIC, CPCU, ARM, CRM, AIS. The Hartford has about 170 agents in New Jersey.

"When they think of The Hartford," Vater said, "We want PIANJ members to see a company that is eager to make it easier and less expensive to do business with us. We want to be better, easier, less costly and more rewarding" [than other carriers], he added.

Details on Spectrum revamp

Vater said the Spectrum product update involved a complete review and overhaul of territories, rates and classes, which was warranted after more than two decades of experience. PIANJ past President Andrew Harris, CIC, CPCU, ARM, CRM, AIS, recalled the original introduction of Spectrum as "a very big opportunity—a huge competitive advantage" for Hartford agents.

"We're betting on our agents to be the biggest differentiators" between Spectrum and other BOP products, Vater told PIANJ, when asked whether he thinks small business policies are becoming commoditized. "Our customer research confirms that business people want to deal with an agent."

The company will be visiting its agents throughout New Jersey in preparation for the June 6 launch. "We expect to write a lot more business. The changes should make us considerably more competitive at the higher end," which the company defines as Spectrum risks priced from $2,500 to $10,000. Vater acknowledged that, over time, the Spectrum rates had become less competitive in this range in certain industries and territories.

Agents are being strongly encouraged to give the new rating a thorough try when it becomes available, Vater said. "Rating will be just as easy to work with; there will be no change in [the process for] getting a price," he assured PIANJ.

In preparation for the roll-out, the company tested its new rates on some 19,000 risks it had quoted a year ago. "About 50 percent saw a decrease, some of them substantial," Vater reported. "About 20 percent were higher and 30 percent stayed about the same."

Using multi-variant rating, the changes greatly increase the number of territories and other risk characteristics that go into determining the Spectrum premium, Vater explained. "We'll have virtually a customized rate for every risk." However, unlike some companies' take-it-or-leave-it stance when using similar rating procedures, "underwriters will have flexibility to make pricing adjustments—they'll still have authority," Vater promised.

"That's important," agreed PIANJ Vice President Donna Cunningham, CPIA. "With the predictive modeling approach [to rating], inflexibility can be a problem."

Vater seemed concerned, lest agents misinterpret a change in the number of Spectrum classifications as indicating the product will be available to fewer types of businesses. "We consolidated some 2,500 classes into around 800," Vater explained. "This just simplifies the classes and makes it easier for agencies to use our online classification guide—our appetite remains as broad as ever," he said.

Ease of rating/quoting

"Spectrum remains the best product from a coverage standpoint. Agents will need to quote the product to see the new pricing," he urged. At meetings throughout the state, the company will promote the Spectrum enhancements and The Hartford's existing—Lines Expressway process, whereby Hartford agents can request quotes based on data that already resides in their management systems.

"The pay-off probably is greatest on—auto," with its large amounts of data, Vater said. "We've heard from our agents, how expensive and annoying it is to re-key information. The vast majority can deploy Commercial Lines Expressway through their Applied or AMS management systems. Commercial Lines Expressway makes it easy and inexpensive to consider The Hartford for business they already have."

In the workers' compensation line of business, he explained another innovation The Hartford makes available to any business risk using the QuickBooks payroll service (not just the software). The "Xact-Pay" product is a pay-as-you-go plan that The Hartford negotiated with Intuit, maker of QuickBooks. "It enables precise matching of rates to exposures, eliminates the need for a deposit premium, and largely eliminates the need for end-of-term premium audits, which are all strong selling points," Vater explained.

PIANJ discussed with The Hartford a potential quote workflow developed by AUGIE—the ACORD-User Group Information Exchange—that would enable pulling the motor vehicle records for drivers only once when quoting through multiple-company rating data aggregators. "As states cast about for more revenue, the cost of abstracts is going up," Harris explained. "Whether driving records could be de-emphasized or a more efficient way found of using this data, the cost savings could be substantial."

A stealth hard market?

Talk turned to market conditions and whether a "hidden hard market" is developing (meaning "prices are up but exposure is down"). "It's hard to say," Vater said. "It's still very competitive. We may be at the bottom, or even beyond the bottom, and I believe we'll see a gradual climb-out as we watch deteriorating industry results and a resulting effect on pricing." As for The Hartford, "Making money is our No. 1 goal. Growth in premium without growth in earnings can become a big problem down the line. I don't want to be in that situation. It's not good for us and it's not good for our agents."

"It's still insane for new business," reported PIANJ Vice President Keith Savino, CPIA, "but there is not so much flexibility on renewals."

Asked point-blank how the company views New Jersey, Vater didn't hesitate. "It's a 'go,' as far as The Hartford is concerned. We want to grow here."

The Hartford, which long ago sold its agent-produced book of New Jersey personal auto business, "is not expecting to re-enter" the state for this line through independent agents in the near future, according to Leach. (The company does write auto for AARP.) However, "it has not gone unnoticed in Hartford that personal auto has been de-politicized" in the Garden State, Leach commented. The groups agreed on the vastly improved regulatory climate in recent years and the evident success of New Jersey's personal auto insurance reforms.

Goals in common: to benefit agents

Two more agent-friendly resources offered by The Hartford include the Business Management Group, a collection of available consultants on such topics as marketing, automation and agency valuation; and The Hartford School of Insurance, both overseen by Shirley Woods, president of BMG and Hartford School of Insurance. "Dozens of New Jersey agents have participated," Vater said.

Savino, an ACORD board member, commended The Hartford's agency technology and long-standing involvement in all-industry efforts. "The Hartford always has taken a leadership role in technology, serving on ACORD's board and taking an active role in AUGIE," he explained.

The Hartford was the top overall scorer in PIANJ 's 2007 Company Performance Survey and the second-highest scorer in 2008. In both years, the company placed among the top five carriers (out of more than 40) on all of the survey's technology-related performance items.

Vater, in turn, praised PIANJ for the many ways in which it helps members achieve ever-greater professionalism, such as the PIANJ Women's Forum programs, chaired by Cunningham. "We are grateful for the assistance PIANJ provides to our agents in every area, to make their businesses more effective," he said.

In addition to Rygiel, Cunningham, Savino and Harris, PIANJ was represented by incoming PIANJ President William R. Vowteras, CPIA.—Kiehl