Six Keys to Harleysville’s Turnaround
Six years ago, Harleysville Group was in need of a big change. The Pennsylvania-based insurer had just come out of the worst performing year in its history. That’s when newly appointed CEO Michael Browne — who declared the company’s performance in 2003 was “totally unacceptable” — stepped in and began his plan to execute a turnaround at the stumbling insurer.
But turnarounds take time, and with the benefit of hindsight, it’s clear that the decisions made by Browne and the rest of the management are paying off for Harleysville. Since Browne’s first full year on the job, Harleysville’s return on equity has exceeded 12 percent annually — among the highest in the property casualty industry. It’s also seen increased premium volume and even an upgrade — to “A” — from A.M. Best, an increasingly rare feat in the last two years.
So how did Harleysville do it? By making a company-wide shift in how the insurer approaches its business, Browne told Insurance Journal during a recent interview. Below are six of the key elements behind Harleysville’s turnaround, according to Browne, whose entire interview can be heard at www.InsuranceJournal.tv
Right Bus, Right Seats
The impetus to get a company going again starts with management, Browne said. “I’m a big believer that the first thing you have to do with a company is what Jim Collins said in his book Good To Great, which is you have to get the right people on the bus in your management team. And, not just the right people on the bus, but the right people in the right seats on the bus. And so, early in my tenure we worked hard to create a new management team that could be as good as any in the industry.”
That meant some internal shuffling as well as recruitment, so Browne said the company recruited leaders from several large national carriers who could come in and help set a new direction within Harleysville — a crucial first step.
Back to Basics
With a management team in place, Browne said Harleysville began to refocus on doing the basics as well as possible — namely good underwriting, good claims handling, good service and productivity. “And then, once we got the right management team on board, we worked hard to get the engagement of every employee in the company.” That’s no quick task when there are roughly 1,600 employees.
“We really sort of focused on the basics of our business,” Browne said. “I’m a big believer that financial results are a lagging indicator of whether you’re doing your business the right way. So, we focused on the basics and the financial results followed.”
Winning Through Technology
One of the biggest changes in Harleysville under Browne’s tenure has been the focus on upgrading technology — abandoning legacy mainframe computer systems and adding new, web-based policy administration systems for both commercial lines and personal lines. Those new platforms “made it a lot easier for agents to do business with us writing both small commercial and personal lines business,” Browne said — a key element of the turnaround.
Market Making
New products, done well, can help drive growth. And over the last several years, Harleysville has introduced a number of new insurance coverage products that Browne said have helped aid its growth. Among them: a human services coverage product targeted at nonprofits, an expanded suite of inland marine coverage and commercial package policy (CustomPak) targeting small to mid size accounts like automotive services, business services, manufacturers and restaurants.
Do As You Claim
Claims handling was a particular focus when he took the CEO job, said Browne, a former insurance commissioner in Pennsylvania. “I’m a big believer that the most important thing in this business is actually the handling of claims. It’s why we’re in business. We put some of our best leaders in claims because a policyholder remembers his or her experience with a company, and with an agent for that matter, when they have a claim… And, we wanted to make sure that we were really, really focused on the fair and prompt handling of claims.”
Agents of Change
Agents were among the most important people involved in Harleysville’s turnaround. They stuck with the company through its down year in 2003, and remained loyal throughout the last six years.
Earlier this fall, Browne spent months going around to company meetings with virtually every Harleysville agent in the United States — about 1,300 agents — to thank them for their help in the company getting its upgrade from A.M. Best.
Browne said agents have been a key driver of changes within the insurer. When Harleysville rolled out its new computer systems, for instance, it worked with agents to find out the kinds of technology and products they wanted. Harleysville’s new CustomPak and human services products were designed in conjunction with its agents.
“Our company is about 100 years old, and throughout our history we’ve been committed to the independent agents as the sole source for distributing our insurance products,” Browne said.
“We remain unalterably committed to that,” he said. “Our commitment has never been stronger. We’ve always been a very agency-focused company. It’s part of our DNA. And, we view our relationship with our agents as a partnership.”
On the Web “Harleysville Turns A Corner” https://www.insurancejournal.tv/videos/4725/