Why a regional carrier might be an agent’s best friend

The old saying “all politics is local” is born of the realization that the things that most directly affect us are local issues. In that respect, one could say that insurance is a local business. Risk attributes, such as building styles, building codes, population density and weather patterns are all “local” characteristics that distinguish one region from another. A good underwriter knows that a risk in one region may have many apparent similarities with a risk in another region, but the two risks are really inherently different. In our business, one size does not fit all, and the companies that tailor their products, underwriting and pricing, to the “local” market are the companies most in step with their customers.

Because their focus is narrower, regional companies can claim to know their markets more intimately. When you want the weather forecast or traffic report, you turn on your local news, not CNN. Similarly, you’ll find that regional carriers excel in understanding, influencing and responding to local market conditions. Because of this, they are more apt to develop products specifically designed for particular market segments. As market needs change, it’s the regional carriers that first recognize it and respond. Regionals underwrite their business in a localized manner. Their underwriters can make insightful risk decisions because of their familiarity with their home region. Agents appreciate this risk expertise, especially when the needs of their clients don’t fit neatly within the guidelines of a national underwriting manual.

We asked two of our colleagues about their experiences with regional carriers: Robert Hempkins, current president of Independent Insurance Association of Texas and principal of Hempkins Insurance in Dennison, Texas; and Jason HeLal, president of Century Insurance Agency, in Denton, Texas. “Regional carriers impress us with their knowledge of local insurance needs and are quick to respond to market needs, whether product or pricing,” Hempkins said. “Regionals rely more heavily on intelligent underwriting and human decision making rather than on automated underwriting processes,” HeLal added. “Our experience in terms of profitability and loss ratios with regionals has been better than with our national carriers,” he continued.

Most regional companies have their roots in the region they serve, so a sense of community connectedness is evident in the way these companies approach their business. The people of these companies — the claims reps, marketing reps, management — live where they do business. Just as they know their territory, they know their agents. Relationships, not guidelines, provide the framework for how business gets done. Regionals invest themselves heavily in trusted partner agencies. Loyal agents enjoy knowing company personnel on a first name basis and having access to the company’s decision makers.

Regionals provide agents and policyholders with stability because they are less likely to move in or out of markets or classes of businesses abruptly. Those carriers typically have operations in a few states and cannot afford to retreat from markets during hard cycles. Likewise, regionals are not likely to jump into business they don’t understand well. One of the hallmarks of most regionals is that they know the issues associated with a line of business or a geography very, very well. And, because success in their home territory is so crucial, regionals work to cultivate and maintain good relationships with regulators and legislators.

“Regionals are committed to our marketplace,” HeLal said. “Typically, they are property markets and have regulated market stances. When the market turns hard, they tend to be our best resources.”

The flatter, more localized organization of regional companies allows them to be more responsive to their customers. Without multiple bureaucratic layers, employees of regional carriers are more apt to understand their companies’ objectives. That helps them better carry out their company’s mission and is an advantage in these companies’ communications with agents, which is likely to be more personal and timely. Regionals typically have stable, experienced management that often produce results better than the industry. These managers are less constrained by corporate edicts and can exercise their entrepreneurial talents more broadly. This goes back to regionals’ ability to design, price and underwrite their products according to market conditions. Seasoned managers at the regional companies can act without having to run decisions through a corporate mill.

The way carriers handle claims is perhaps the most predictive indicator of policyholder satisfaction. Regional companies have the deserved reputation of providing fast and fair claims handling. HeLal noted, “Claims tend to be handled faster and better because the local claims office is usually in the same building with the home office. That makes our claims staff ultimately more accountable to the middle and senior management. As agents, we use this as a huge selling tool. We expect claims to be processed and paid in a matter of days, not weeks. Our clients appreciate that.”

There’s a lot to like about regionals: understand the local issues; responsive to market conditions; localized underwriting; accurate pricing; “native” products; relationship driven; commitment to markets; dedicated to regional success; often outperform industry; excellent claims handling; local management runs the business — all reasons why a regional carrier might be an agent’s best friend.

Parker W. Rush is president and chief executive officer of The Republic Group, Dallas. Before joining The Republic Group, Rush had spent his career at a large national property and casualty insurance company where he was a managing director. The Republic Group is a regional organization whose companies operate primarily in Texas and the South Central states, offering personal and commercial lines as well as managed programs.