Encompass Chief in Mass. Hopes Reformers Enjoy Red Sox-Like Success

Andrew J. Carpentier’s Quincy, Massachusetts office is plastered with Red Sox banners and posters and while the images of the World Series occasionally intrude on his thinking, he’s had another score on his mind. That’s the score of reformers versus defenders of the Massachusetts auto insurance marketplace.

The regional marketing vice president and chief operating officer for Encompass Insurance in Massachusetts is encouraged that the reformers are gaining ground in this state with a reputation as difficult for insurers as Yankee Stadium is for his hometown team.

“CAR reforms are essential to evening out some of the inequities,” Carpentier maintained during a recent pre-World Series interview.

Carpentier was referring to changes in the way the state’s high risk pool for private passenger auto, known as Commonwealth Auto Reinsurers, or CAR, assigns risks and costs. A proposal to convert the current reinsurance facility operation into a more familiar assigned risk-type plan to be called the Massachusetts Assigned Insurance Plan (MAIP) was the subject of a second public hearing on Oct. 29.

“We have said to everybody that change is long overdue and that if there is no change, the system will implode,” he added. The company is part of an industry coalition backing reforms.

Carpentier noted that about 90 percent of the auto market is controlled by domestic companies with limited capacity to expand at a time when additional surplus is needed. Reforms are needed to attract more capital, he said.

But the MAIP alone will not be sufficient, he added. The state’s safe driver plan is “equally important,” as is dismantling the fix-and-establish price control system.

It will take continued hard work by the industry, regulators and a legislative task force for all of this to happen–and will require some trade-offs, he acknowledges. “Rate relief has to be part of it,” Carpentier says candidly. “We need to move forward to where bad drivers carry their fair burden so that good drivers get some relief,” he said.

While the Massachusetts auto market is important to Encompass, so is the rest of the personal lines market. That’s because Encompass only writes personal lines.

Formerly CNA Personal Insurance, Encompass is today the marketing name for a division of Allstate Insurance Company that focuses exclusively on the sale of personal property casualty products by independent agents.

Encompass features a unique product called the Universal Security Policy (USP) that permits insureds to combine their auto, home, boat and umbrella coverages with aggregate property amounts and a single deductible. (In Massachusetts, the auto coverages are carved out.) The USP helps eliminate gaps in coverage.

Given its coastal exposure and weather, the property market in the Northeast can be tricky. Forgetting about hurricanes and big storms, just normal winter events or so-called “ordinary cats” can cost a company from eight to 10 points on its loss ratio in this region, according to Carpentier.

While the markets he navigates may be challenging, there is one challenge Carpentier is glad he does not have to face: a skeptical agency plant. Agents are often wary of carriers like Allstate that use direct distribution systems along with independent agents. One of these carriers, Progressive Insurance, recently launched an effort to improve its relations with independent agents.

Carpentier claims that his company does not suffer in its dealings with independent agents even though its parent is better know for its captive agency success. Encompass operates independently, including running its own claims operations, and there is very little involvement by Allstate, according to Carpentier.

“Agents have been tremendously loyal to this company,” he said. They are true partners.”

At the same time, Encompass has the advantage of the financial backing and resources of a giant national company in Allstate. That can insulate it to a degree from the ups and downs in markets, such as Massachusetts, where smaller domestic carriers might find it more difficult.

Encompass tends to go after middle to upper class clients, some with multiple cars and homes, and does not claim to be the cheapest price on the market. One result is that it enjoys an average premium per agent higher than some other carriers.

Its unique universal policy and its target markets invite a lot of pressure to deliver on claims. It’s here where Carpentier, who started in the claims side of the business back in 1973 with CNA, maintains his company truly shines.

“Where we excel is in claims,” he asserts proudly, citing an extensive system designed to assure “same day” responsiveness and recent J.D. Powers surveys.

Carpentier is encouraged by the determination on the part of industry leaders, agents and public officials in Massachusetts who are attempting to improve things, and is pleased with the progress thus far. Ever the Red Sox fan, he remains optimistic.

“Two years ago, nobody would have predicted where we are today,” he added.

He wasn’t talking about baseball.