Martin Hartley, executive vice president and chief operating officer of PURE Group of Insurance Cos., sees ample growth opportunities for mutual carriers despite a soft market. Some of those opportunities are in the form of increasing and measuring customer satisfaction, building a better team through superior human resources strategies and being innovative.
Hartley spoke with Insurance Journal about these opportunities, the environment for mutual carriers and home and auto.
This has been edited for clarity and brevity.
Insurance Journal: Where do you see opportunities for growth by mutual insurers as the soft market continues?
Hartley: We’re structured such that if we have an underwriting profit, if at the end of the year we collect more in premiums than we pay out in claims and expenses, then we return that money back to our policyholders. That is an incredible demonstration of alignment of interests, if you think about it.
If our premiums are too high and we don’t pay out that much in claims, then we return that money back to the policyholders. On the flip side, a stock company, their stated purpose is to maximize value to shareholders. They’re trying to maximize the difference between the premium they charge and the amount they pay out in claims and expenses.
When they do achieve that, that doesn’t go back to policyholders, it goes to the shareholders in the insurance company. If you start with that fundamental question of what makes the mutual company different, and we are reciprocal. It’s a form of mutual. What makes a mutual company different? It is that alignment of interests.
IJ: What growth opportunities do you see?
Hartley: We have a real focus on serving our members. Through that focus, we see growth opportunities. This is the opportunity for mutuals everywhere, through that alignment, through that transparency, and through a focus on serving their customers, to find those opportunities for growth.
Just to give you a sense of some of what those are, from a growth opportunity standpoint, if we do an amazing job of delighting our customers, they tell other people. If you think about growth into other areas or other geographies, that’s one thing. But we operate in a big market segment. We have some proportion of that market segment.
Our belief is that if we do an amazing job in delighting our customers, they will tell their friends. They will renew with us each year because they enjoy what we do. We will grow through delivering a better product and a better customer experience than anybody else.
That is the primary growth opportunity for any business: Deliver an amazing product and have it be talked about. We have a 96 percent retention rate, year on year. Ninety-six percent of our members renew with us each year, which shows the level of satisfaction with what we’re doing.
IJ: What are the challenges to growth as the soft market continues?
Hartley: There’s a couple of things there. You’re right in pointing out a soft market, that there’s a challenge for an insurer when rates are coming down. If you do grow, do you compromise your sustainability?
There’s a couple of things there that I would say. One is that we’re not trying to maximize the underwriting profit, as we talked about, we’re passing that back.
We’ve probably got a higher tolerance for a soft market than some stock companies looking for a different return.
The second is that I’d say two important things exist in a soft market. One is that it can be universally soft, but some segments of the market are still overpaying for their insurance.
Using data science to identify which customers are likely to have lower loss costs over time, we can continue to grow in that segment. We also can avoid those customers that when we look at, we think their loss costs are going to be higher than the premium we can charge in the market that would compromise our surplus base.
IJ: What do you see as obstacles to growth?
Hartley: If you think about the challenges out there, one of them is the human resource element of growth, that as we grow, we have to bring on more people, grow our organization, our infrastructure.
To grow successfully means growing your employee base and maintaining the same culture that allows you to deliver the exceptional service that we’re delivering.
In terms of challenges and obstacles, maintaining a culture of service while growing the team is a key element of that. We do a few things in that area to ensure consistency.
One of them is in our interview process. We interview for empathy, to get a very distinct interview process around identifying whether the person we’re speaking to and interviewing is emotionally intelligent, can register and interpret how the people they’re serving are feeling, can listen appropriately, can adjust their own response, monitor their own behaviors, and respond with great empathy to situations.
Building a robust interview process to make sure we’re attracting and bringing on the people who we really believe will be able to serve our members well is a key element.
The second element of this is really our culture. I’ll speak briefly.
It’s difficult. We have, I would say, a fairly clear culture here, a clear purpose to what we’re trying to do in terms of helping our members be safer, smarter and more resilient. A real culture of putting the member first, what we could call member-centricity.
If you think about the principles under which our team operates, we’re clear about what should come first at all times. What that creates is a consistent culture that allows us to execute well, but also brings in new people who recognize that culture quickly and fit with it.