The CEO of Appleton, Wis.-based SECURA Insurance Cos., John Bykowski, took some time recently to talk with IJ during the Independent Insurance Agents of Wisconsin’s annual convention. SECURA has total assets of $406 million as of year-end 2003, operates in eight Midwestern states, has been in business for 104 years, and was recently upgraded to “A” by A.M. Best.
The company sells personal, commercial and farm lines in Minnesota, Michigan, Wisconsin and Iowa, personal and commercial lines in Missouri, Illinois and Indiana, along with commercial lines only in Kentucky. A little over 400 agencies are appointed with the company.
Riding the crest of the hard market, SECURA saw an 18 percent increase in direct written premium to $279 million in 2003 and a 22 percent jump in policyholders’ surplus to $128 million. Fifty-four percent of SECURA’s book is commercial lines, 39 percent personal and 7 percent far business. Meanwhile, the company saw 26 percent growth in commercial lines in 2003, aided by $43 million in new business.
Bykowski discussed the virtues of operating in Wisconsin and the Midwest, credit scoring, the softening market and agency relationships. One way in which SECURA has tried to set itself apart is through MILE-STONE, an all-in-one auto and homeowners policy. The package personal policy makes up 40 percent of SECURA’s total personal lines book of business.
“You need to have a package for independent agents to compete,” Bykowski said. “And this makes it so much easier for the agent. There’s one bill, and the customer can pay it directly on the Internet.” He added that contrary to conventional wisdom, MILE-STONE has a stronger retention rate than for customers who buy each product separately.
“One portion of the account may go bad, but you retain the whole policy,” Bykowski said, noting that MILE-STONE’s retention rate is 10 percent better than for SECURA’s stand-alone auto and homeowners policies “In the real world, you might lose that anyway as a monoline policy.”
SECURA has made the conscious decision to stay in the Midwest, picking on a state-by-state basis where to enter the market. “It’s much better to have a company domiciled in Wisconsin than, say, New Jersey, Texas or California,” Bykowski said. “They are regulating our business, but it is a very favorable regulatory environment.
“When we look at expansion, one of those key things we look at is regulation,” he added. “We would not enter that state if we felt we could not make a profit. We had challenges in Michigan with their Essential Insurance Act. Now there are rumblings in Missouri about a ban on credit scoring. It took almost a year to get SECURA licensed for personal lines in Illinois.”
On the subject of credit-based insurance scoring, Bykowski defended the practice, which he said is only “a small part of our rating scheme.” Michigan’s Gov. Jennifer Granholm and Missouri’s Gov. Bob Holden, both Democrats, have pushed for outright bans. Bykowski argued that such a move would only hurt the good risks by depriving them of a discount.
“It would be a mistake to ban it totally,” he said. “More than half of the Michigan customer base, for example, is enjoying a discount—60 percent of them are getting a discount with us. If we had to abolish credit scoring, they’d lose that discount … It’s just a way for those people with good credit and good driving records to have to subsidize people with poor credit and poor driving records. It’s wrong.”
Wisconsin, on the other hand, has not made any noises about banning insurance scoring. The state has not even passed the NCOIL model act that places modest limits on the practice and which more than a dozen other states have enacted in one form or another.
As for the softening market, Bykowski said it is a reality but at SECURA at least it’s happening more on the commercial side than in personal lines. “Personal lines customers tend to be more loyal,” Bykowski said. The company’s goal for this year is to improve customer retention and has revamped its billing, customer service and automation as part of the effort.
SECURA’s agents, Bykowski said, are of course a crucial element of this retention strategy. “We believe a lot in relationships,” he said. “That’s why we show up at these things. You don’t see to many CEOs here usually … We have tremendous agency loyalty. We are the No. 1, 2, or 3 company at 80 percent of the agencies we deal with. For our part, we won’t appoint another agency across the street. The loyalty goes both ways.”
As befitting a mutual insurer, SECURA’s approach to growth is necessarily cautious. While Wisconsin is its biggest state by premium volume and Minnesota and Michigan its next two largest, Bykowski said the company’s looking to appoint new agencies in Illinois.
“That said,” he added, “we’re fairly stingy with our agency contracts.”
Editor’s note: A version of this story will appear in the June 21 print edition of Insurance Journal Midwest, which covers Ohio, Michigan, Indiana, Wisconsin, Illinois, Missouri, Minnesota, Iowa, North Dakota, South Dakota, Nebraska and Kansas.
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Topics Agencies Pricing Trends Illinois Michigan Market Wisconsin Minnesota Missouri
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