ERC Acquires, Reactivates New ‘GE CyberComp’ Brand

On March 29, Employers Reinsurance Corporation (ERC), a GE company, acquired and reactivated Cyber-Comp through its subsidiary Westport Insurance Corporation. Westport will use “GE CyberComp” as the brand name for this online service.

Prior to the acquisition, CyberComp was an operating unit of Reliance Insurance Company.

“They stopped accepting new business Sept. 18, 2000, and stopped writing renewals Dec. 31, 2000,” said Bruce Coates, vice president-marketing, research and development, Westport. “But we aren’t taking any of the existing liabilities. What we purchased were renewal rights.

“We’re going to be re-underwriting the book that’s left, and for the business that is acceptable or fits our new template, we will be offering quotes on that business.”

Founded in 1997, CyberComp was the first insurer to quote and bind workers’ comp coverage online. By accessing CyberComp.com, appointed agents are able to conduct business entirely online.

“The thing that really interested us was being able to get a business model in CyberComp where we can deliver, in this case, workers’ compensation products to the retail agents in a very easy-to-use method,” Coates said, explaining how the entire process takes roughly 10 minutes.

CyberComp’s quick turnaround of quotes enhances a producer’s ability to effectively compete without the growing expenses associated with the traditional insurance transaction.

“Once the policy is issued and out to the agent for delivery, the agent can come back to the site and check on the policy status, the endorsement status, the billing status and the claims status,” Coates said. “So it is a complete solution for the independent agent.

“The agent knows immediately whether or not we’ve accepted the risk. They don’t have to wait for days for an underwriter to get back to them. They might not always like the answer, but the reality is that we give them an answer quickly.”

In addition to purchasing the assets from Reliance, ERC is acquiring 25 key CyberComp employees scattered in six strategically located offices. And ERC has no plans of relocating CyberComp’s headquarters, which are currently located in Lawrenceville, N.J.

“Only about one third—a little more than 40 percent of their employees—are located in Lawrenceville, while the rest are scattered throughout the country…making it a virtual company in essence,” Coates explained.

Through the newly branded “GE CyberComp” online system, Westport will offer workers’ comp policies on a stand-alone basis. “But we’re not going to be all things to all people. We’re going to be as Reliance was—selective about what they would write, what states they would be in, and the underwriting template they would use to evaluate the business,” Coates said.

Coverage is targeted for small- to medium-sized employers. “Our average premium is going to be in the neighborhood of $12,000-$15,000,” Coates said.

At Reliance’s peak, the online business generated $146 million in gross premiums written in 1999, and more than 1,500 agents were doing business with CyberComp in 43 states.

California is one of the key states in Westport’s Phase I plan. “Now again, we’re not going to be the savior, but it’s important to note that we are going to be a reputable company,” Coates said. “So bringing a stand-alone workers’ comp market with ‘A++’ paper and a reputation of ERC-Westport, we think is a big home run.”

During Phase I, the company is planning to appoint roughly 300 agents in 15 states, with a goal to expand into other states at a later date. “Once we get fully implemented, we’re looking at approximately 1,100 [agents] total,” Coates said. “Now that number may go up or down depending on our plans as we roll out.”

In the first three days following the acquisition announcement, Westport received a great deal of interest from agents all over the country. “Some of the enhancements we anticipate down the road include making some of those capabilities that GE brings to the table available to our agents and their customers,” Coates said.

Eventually, the company would like to add other Internet-based coverages, but doesn’t have any firm plans on the drawing board. “It’s very important in our business to make sure that this acquisition is 1) successfully integrated, and 2) that we make our number…those are our first priorities and that’s where we’re going to be focused,” Coates explained. “But we do have people looking at …other ways to put tools in the hands of the retail agents to help them succeed and to help Westport succeed.”

Topics Mergers & Acquisitions Agencies Workers' Compensation