The commercial operations of SAFECO Business Insurance (SBI) and SAFECO Commercial Insurance (SCI) will be consolidated into one organization in an effort to concentrate on small- to medium-sized business accounts, SAFECO announced on May 17. The new combined operation is to be headquartered in Seattle.
Before consolidation, SBI underwriting operations were located in 13 regions: Seattle; Spokane, Wash.; Fountain Valley, Calif.; Northern California; Portland, Ore.; Dallas; Indianapolis; Atlanta; Denver; St. Louis; Chicago; Cincinnati and Hartford. Those underwriting operations will now be located in five regions: Seattle, Fountain Valley, Dallas, Atlanta and Indianapolis.
Moreover, SCI underwriting operations, which were located in Seattle, Fountain Valley, Denver, Chicago and Atlanta are now located in a single location: Seattle.
SAFECO Vice President of Field Operations Spencer Donkin emphasized, “It’s just the underwriting operations in those locations.” He added that SAFECO’s Chicago and Denver offices still maintain claims and marketing operations.
In addition, SAFECO will be consolidating its two headquarters. The SBI headquarters formerly based in Indianapolis will consolidate with the SCI home office in Seattle. The latter city will become the commercial headquarters for SAFECO.
“Before we had two operations—both operations with different market focuses, different strategies,” Donkin said. “Now we’re blending them together and having one commercial focus.”
The company indicated that the consolidation would affect about 450 of its employees nationwide. Until now, SCI and SBI employees have numbered 459 and 759, respectively. SAFECO estimates 450 as the approximate number of employees who will be unable to relocate during the consolidation process, which will be phased in through the end of 2001. Affected employees have reportedly been offered transfer packages.
“We currently have two commercial systems that we support. We’re going to go to one,” Donkin said. “Do you need two folks to support that commercial system? Can they be re-deployed in other areas?
“…Everybody wants to focus on the elimination of jobs, but the real message is about the focus that we’re creating on the small-to-medium business market and the strategy behind it and what we’re doing for independent agents,” Donkin added.
He also emphasized that by consolidating to five operations, “we’re going to have a need to increase staff in those operations. That’s why we’re trying to [provide incentive for] a lot of the folks in Cincinnati and Denver to relocate to some of these new locations with attractive relocation programs.”
Donkin explained that the basic business rationale behind the changes lies in the fact that SAFECO is a leading writer in the small-to-medium commercial insurance market segment and is now intensifying efforts to grow that segment. SCI traditionally dealt with national and large regional brokers, with a focus on larger commercial accounts. On the other hand, SBI focused on the small-to-medium market segment.
“The small-to-medium market segment has been growing faster than the larger commercial market segment,” Donkin said. “In addition to the growth of the market segment, historically overall it’s been a little bit more profitable than the large commercial segment.” For example, SAFECO writes $1.8 billion of commercial lines premium—$1.3 billion of that in the small-to-medium market segment.
In part, Donkin attributes the significant potential for growth in this segment to an entrepreneurial spirit in the U.S. which has been thriving for the past 10 years. This has resulted in an influx of new businesses, largely fueled by positive developments in the economy.
In recognition of the fact that small commercial accounts can be somewhat labor-intensive in terms of generating quotes, writing and service, SAFECO has developed a number of initiatives to help agents and brokers handle that business more efficiently. These will include a contact center for small business customers, which would function as a centralized facility for handling inquiries on small business accounts, both from agents and customers.
In addition, the company plans to develop its automation capabilities in order to streamline the underwriting process on both new business and renewals.
SAFECO also announced that it will be reviewing its Select Markets operations, which currently offers a number of specialty products which the company believes are not necessarily in alignment with its new focus on the small-to-medium market.
“There are a variety of different product lines that we write not necessarily for independent agents but maybe program administrators or distributors,” Donkin said.
In addition to the contact center already mentioned, there will be another centralized facility. “We’re still going to have the ability to write large commercial accounts out of a…special accounts facility,” Donkin continued. “It will be headquartered in Seattle. Basically, that unit will have a concentration of underwriting expertise. They’ll also have access to specialized loss control on claims services for large commercial accounts.”
Donkin said this will be opened to key agents who support SAFECO in its core lines, whether small business, small-to-medium business or personal lines.
Topics Agencies Commercial Lines Underwriting
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