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By Donald V. Hale, Jr., CPCU, CLU
Senior Vice President, Underwriting
Maine Employers’ Mutual Insurance Company
 Success
within this industry as a mono-line workers’ compensation writer
will require more direct and lasting relationships with a company’s
most profitable clients. Even in the midst of a hard market condition,
many larger, more profitable clients are exposed to competitive
alternative offerings from multiple-line carriers and self-insurance
groups.
Information resources including the Internet,
agents and brokers, as well as insurance bureau publications simply
encourage clients to shop around for coverage.
In Maine, for example, the insurance bureau
publications suggest shopping tips for accessing and approaching
more than 240 licensed carriers. These information sources most
often characterize the workers’ compensation product as a general
commodity, offering statutory coverage and some variety in pricing
and premiums. As a commodity, the client is encouraged to seek a
product without differentiation or value-added services.
In light of this industry condition, how
do mono-line writers and state funds differentiate themselves from
these product perceptions and their competitors?
Most experts agree that the key is to create profitable relationships
with customers by delivering what is perceived to be superior customer
value and satisfaction to their clients. This concept is innately
logical. However, how can this be accomplished in the real world
with fixed rates, rising costs and fewer good customers to go around?
“Touch points”
I will begin by relating this subject to our company experience.
Rather than use a term such as mono-line, we promote ourselves as
a niche, specialty workers’ compensation company. We promote
a high quality, high touch service for both workplace safety and
claims management.
Our “touch points” include both
external (agents, regulators, competitors, claimants and policyholders)
as well as internal (underwriters, premium auditors, accounting,
loss control, claims, and information systems).
Our contact or connection with external customers
at all functional levels must continually strive to meet or exceed
their expectations.
What is a customer worth? Our company writes
75 percent of our premium with 19 percent of our customers. These
customers stay with our company an average 5.3 years. If we lose
a customer, we lose almost five-and-a-half times the annual premium.
Most experts also agree that it costs five
to ten times more to obtain a new customer than to keep current
customers satisfied and that the customers represent a lifetime
value for the companies. Successful organizations retain clients
by building customer relationships and creating customer equity.
This interaction, facilitated through the aforementioned touch points,
demonstrates the substantial worth of a good customer with our business.
One company’s experience with exceptional
service and results offers the following insight:
The evaluation of key long-term accounts that remained with our
company through volatile market changes reveals certain service
patterns that may have contributed to their loyalty and profitability
as valued customers. The factors are:
• We initially identified and addressed
the clients’ problems and needs.
• Clearly communicated our concerns to the
client and agent.
• Developed service action plans with the
client to address their needs.
• Offered pricing and products consistent
with their efforts and loss experience.
• Provided appropriate support, information
and advice as well as following
feedback on their status and progress.
Match the customer’s expectation
Customer value should equal the greatest perceived value by the
customer. Customer satisfaction equals performance matching the
customer’s expectation. In our business and market condition,
it is not possible to lower prices to increase profits. Therefore,
we must increase our service offering. This, of course, is basic
economics.
To build and maintain profitable relationships,
consider the following service focus points:
• Solidify relationships.
• Go to extremes to keep your customer happy.
• Make it easy to do business with your
company.
• Embrace and utilize the internet and technology
to bring your customer
closer to your services.
• Develop a companywide culture that fosters
this “delight the customer”
attitude toward service to customers.
In summary, satisfied customers are not price
sensitive and tell others of their experience. Highly satisfied
customers are loyal and of greater value to the company. In your
effort to deliver quality service, “aim high.”
Author Don Hale can be reached at dhale@memic.com
or (207) 791-3310.
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