Napoleon insurer builds new HQ
Although German Mutual Insurance Company is one of Ohio’s oldest insurers, having been established in 1867 - just two years after the conclusion of the American Civil War, the company has never had intentions of become one of the state’s largest. In fact, the Napoleon-based auto, fire, casualty and theft insurer really didn’t start to grow until it was almost 125 years old. Since then, German Mutual has been enjoying steady expansion and, as a result, now has outgrown its offices.
The company - owned by some 19,500 policy holders concentrated in 58 Ohio counties - recently began construction of its new 18,000 square-foot headquarters building at 1000 Westmoreland Drive, near State Route 24 and Napoleon High School. The brick single-story structure, to be distinguished by the steep pitch of a gabled roof with its four large dormers, will be completed early next year.
Designed by The Collaborative Inc. of Toledo and built by Rupp-Rosebrock Inc. of Liberty Center, the new building should meet German Mutual’s space needs well into the third century of its operation.
According to German Mutual President Rupert Knape, the company had operated as an “assessment mutual” company - restricted to providing insurance against fire and windstorm damage to farmers in Northwestern Ohio - for most of its 131 years in operation. As such, state regulations prohibited it from writing auto, theft and liability insurance. In 1985, German Mutual, which began as the German Mutual Insurance Association of Defiance and Henry Counties, converted its status to an ‘advanced premium mutual’ company which permitted it to move into automobile insurance, expand its homeowners and commercial insurance products, and offer a variety of other casualty lines.
In 1987, the company issued its first auto policy and now has almost 8,000 auto policies in force. The company also offers a range of commercial products including fire, theft, liability as well as policies specifically structured for churches.
In the late 1980’s, German Mutual’s office of six employees move from a small “A” frame building into large quarters on Chelsea Avenue but soon was overtaken by crowding at which point even the board room was co-opted for office space. The company, with more than $12 million of polices currently in force, now has a 23-person staff; and the new offices will provide three times the space of the present building. The new building will also house a larger and more sophisticated computer system to support its network of 180 agents.
The building, which will occupy only a portion of a six-acre site, has been designed to accommodate expansion. There are also approximately 14-acres adjoining German Mutual’s new headquarters which may be developed in the future.
Building brands necessity for insurance companies
How do you market to customers who really don’t want your product but need it, especially in a marketplace flooded with competitors? By building a strong brand.
“Insurance has an additional hurdle because it represents one of those services we all must have, but grudgingly pay for,” said Philip Shirley, president and COO of GodwinGroup of Jackson. “With that in mind, a strong, established brand representing the qualities we want can be a critical element in customer decision-making.”
Establishing an identity versus building a brand is “talking the talk” versus “walking the walk,” said Chris Ray, president of The Ramey Agency in Jackson.
“Progressive Insurance … is a company that’s working hard to walk the walk,” said Ray. “And they have a solid brand to show for it.”
Branding is not a mystical, magical concept, said. Eric Hughes, senior vice president and creative director for Maris West & Baker in Jackson.
“It’s the sum of all of the thoughts and feelings and impressions a company generates through its communications with its audience,” he said.
Every company has a brand, said Shirley.
“The question is whether the company manages the brand or allows the marketplace to decide their brand position,” he said.
One reason insurance companies are feeling market pressures to establish strong brands is because consumers know they are king, said Shirley.
“They demand value for their money and don’t just take whatever we offer,” he said. “They are educated. They shop. And customer loyalty is waning dramatically for marginal brands, which often find themselves caught in a downward spiral of promotions and discounts to replace customers who leave them.”
To develop a brand, the Ramey Agency uses a system called Brand Journey, a CDROM based program “that helps us walk through a half-day’s worth of questions and answers with a client group to begin distilling what a company should stand for,” he said. “It can be a grueling process, but we’ve seen it work for companies large and small, organizations, universities and even the Mississippi Band of Choctaw Indians.
“Every agency has its own methodology for establishing a branding program. Ours has worked well for us for the past four years,” he said.
During the brand-planning process, GodwinGroup defines the three C’s: category. competition and customer, said Shirley.
“We call it ‘C3 Intelligence,”‘ he said. “We take a broad look at the category in which the company operates. then we look specifically at the competition. Finally, we look at the customers to determine what motivates them to buy from our category in the first place.”
Maris West & Baker looks at four indicators to determine whether a branding strategy will work, said Hughes.
“One is relevance,” he said. “If your strategy is meaningful to your audience, you’ve probably got a winner, Two. it has to be credible. Three, it also has to be unique, something that nobody else is claiming. Last, it has to be practical. Does it fit your culture? If you get A-pluses in a branding strategy for all four, you can pretty well bank on the fact that it will work in the marketplace.”
When Old Republic Title Insurance Group acquired Mississippi Valley Title, Old Republic made the decision not to change its name, said Peter Marks, senior vice president and account supervisor for Maris West & Baker.
“It comes down to business being done differently in different parts of the country. Mississippi Valley Title operates in the South, where there is a lot of relationship building,” he said. “Their target isn’t necessarily the consumer, but the people who advise the consumer, such as closing, attorneys and bankers who close deals. GodwinGroup stresses deep branding, said Shirley, which simply means carrying the brand identity throughout the organization.
“It impacts how the telephone is answered, signage and every piece of paper that leaves the organization, advertising all the way down to the dress codes in some instances,” he said.
A brand should always include the three P’s: position, personality and promise, said Shirley.
“Building a brand is not a project; it’s the process of climbing ever up a neverending steep incline,” he said. “The view continues to get better if you stay on the path.”
The CEO must be the brand champion, said Shirley.
“Branding has to start at the top, and must be communicated throughout the organization to achieve maximum success in managing this valuable corporate asset,” he said.
If a local insurance agency is part of a strong, national brand, the national brand should be leveraged locally, said Ray.
“Often, national brands will gear their marketing efforts to help local agents translate the brand in each market,” he said. “For example, everybody knows that State Farm is like a good neighbor because the company has invested millions of dollars over the years pounding that message home. The tagline is not just a marketing gimmick, it’s a reflection of the State Farm brand and corporate ethos, which is helping people manage risks and recover from the unexpected. They make it their business to be a good neighbor. They also follow the old maxim, ‘Think globally. Act locally,’ by profiling local agents and their volunteer work and investing dollars into various ‘good neighbor citizenship’ programs. Local agents can leverage in their communities to add continuity to the brand.”
Insuring your camp’s buildings and contents
Buying proper insurance to protect the full value of your camp buildings and contents is fundamental to good risk management. However, many camps overlook this issue and run the risk of being incompletely reimbursed for damages under their insurance policies.
Why is this issue missed by many camp directors in the risk management process? One reason is that most people tend to respond only to the most visible items the ones crying out for attention at any given time. Some of these issues are urgent and important. But sometimes the apparently urgent and important items obscure other equally important issues. Property insurance value is a risk area that doesn’t cry out for attention but that requires attention and diligence.
Inflation is another reason camps often neglect property value. Unless your camp has recently undergone renovation or new construction, you may be unaware of the current costs of labor and material. In addition, camp directors may not understand certain terms or they may be confused about how insurance values are determined.
Actual cash value
Actual cash value is an insurance valuation method that starts with the replacement value of a building or its contents. Then, the insurance company subtracts the item’s depreciation. Deprecation is based upon the item’s age and condition, which can sometimes be complicated to determine. Most older camp buildings are fully depreciated by accounting definitions, but not by insurance definitions. Consequently, even though a building is 50 years old, it may not be depreciated more than 25 or 30 percent.
Factors that reduce depreciation include proper maintenance, renovation, and repair practices. While there is some subjectivity in determining depreciation and actual cash value, detailed records of repair, maintenance, and improvements will help you negotiate successfully on this issue.
Replacement cost valuation
Replacement cost valuation, in contrast, theoretically replaces damaged property with material of like kind and quality, without deduction for depreciation. In essence, it replaces the old with new. Replacement cost settlements are complicated by the fact that some camp buildings are constructed from materials that are no longer available.
Consequences of too little insurance to value
Depending on how your property insurance is set up, you might incur a penalty on a loss if you are caught short on insurance to value. Under these circumstances you might be paid a proportion of your total loss. This amount usually bears a relationship to the amount of insurance you had versus the amount you should have carried.
If you plan to rebuild and have not planned properly to secure full value for your loss, you might be forced to borrow money or spend money you have set aside for other purposes. This situation could have severe financial implications for your business and your future.
Avoiding surprises
What should you do to avoid property insurance valuation surprises?
Obtain estimates
You can obtain estimates of construction costs to replace camp buildings from local building contractors or real estate appraisers. Be cautious if you do use professional appraisers. The commercial appraisal systems generally used today do not have information that translates completely to camp buildings, especially unique buildings. Consequently, estimates of insurable values may be misstated. Valuation estimates prepared through these professional appraisal sources should be checked against common sense and, when available, recent actual replacement cost expenditures. Your insurance company can help you test the accuracy of these estimates.
Insure personal property values
Markel Insurance Company’s claims department consistently finds that camps underestimate the value of their personal property. Resident camps should consider a limit of 25 percent of their real property (buildings) insurance for personal property. Day camps should consider between 15 to 20 percent of their real property limit for contents. Remember, these figures are not absolutes. Consider creating a personal property inventory and ask your suppliers to help develop current values for your personal property. You may be surprised at what you discover.
Buy the right amount of insurance
Buy an appropriate amount of insurance to comply with the provisions of your property insurance policy. Ask your agent to explain the coinsurance clause and its relationship to your total property insurance limit. On subsequent renewals of your property insurance, increase the values slightly to keep pace with inflation, about 4 percent today. Obviously, if you add new buildings or make additions or repairs to existing buildings, you should change your property values. Renovations do not necessarily directly increase the value of your buildings. It is a good idea to ask your contractor for advice about added value from renovation projects. Consult with your insurance agent or consultant, too.
Keep information in a safe place
Keep the square footage, a brief description, and pictures of each building in a safe place. You can also videotape your facilities while describing each building and its content. By preserving evidence of your facilities, you will make it easier to prove your loss if your property is damaged.
Halifax cuts premiums on buildings insurance
Halifax Building Society is cutting the cost of its buildings insurance policies next year by an average of 20 per cent, with some premiums falling by 60 per cent.
But the society’s buildings insurance is still not the cheapest in the market. Direct Line, the telephone insurer owned by Royal Bank of Scotland, beats Halifax in all four areas given by the society as examples of its new lower premiums.
Halifax `s insurance is underwritten by three insurers - Sun Alliance is lead insurer, with General Accident and Legal & General also providing cover. Sun Alliance’s own buildings insurance, available direct to the public, is cheaper than the Halifax version in three of the four examples quoted by the society. For a house in Aberdeen Sun Alliance charges pounds 58.50 compared with Halifax’s new charge of pounds 71.60, which is nearly pounds 20 cheaper than this year’s Halifax premium.
Halifax buildings cover is open only to homeowners with a Halifax mortgage. More than 75 per cent of its borrowers - 1.4 million out of 1.8 million - take the society’s own insurance.
The society, in common with others, used to charge pounds 25 to borrowers who wanted to choose their own insurer. This charge was dropped this year.
Peter Wood, chief executive of Direct Line, said: “This is a desperate attempt by the Halifax to slow the flood of insurance customers abandoning the building societies for the benefit of better value and better service at Direct Line. When the public realises how much the Halifax can afford to cut its home insurance premiums, it must gasp at how much it has been overpaying in the past.”
The building societies earn commission from selling insurance, but can negotiate favourable terms because of the bulk business they pass on to the insurance companies.
The public is becoming more aware of the freedom to buy buildings insurance from any source even though an “administration fee” is still the norm. Societies say they have to check policies from other insurers to ensure that they are adequate.
Halifax is introducing a no claims discount for policies renewed in 1996 following a claim-free year. It has not yet announced details of the scheme.
The society said the proportion of its borrowers taking its own insurance cover had not markedly declined.”We retain the vast majority of our insurers at renewal. This is to make sure that we remain competitive,’ a spokeswoman said.
Halifax has also refined the way it classifies properties by using the first four digits of the postcode rather than first three.
Insurer slashes building cover
Prudential has cut the cost of its buildings insurance cover by up to 29 per cent, down from pounds 180 to pounds 143 for a three-bedroomed semi in Reading. Southampton, now famous as the footballing home of Bruce Grobbelaar, will see its buildings insurance plummet by the same amount. Guildford, once described as having this country’s answer to the Manhattan skyline, has also seen its premiums tumble from pounds 180 to pounds 128, while in Norwich, cover will cost pounds 125 instead of pounds 143.
The Pru’s reductions, announced yesterday, follow the company’s decision to increase the number of postcode ratings areas, allowing it to price more accurately. The cuts also follow a price war that has engulfed the home and contents insurance market for more than 12 months.
Long Islanders receive awards and recognition: April 1, 2005
The Nassau County Sports Commission honored WFAN-AM sportscaster Ann Liguori with its Broadcast Media Award. Liguori lives in Westhampton.
Allstate Insurance named Darryl Colletti National Conference qualifier for his high level of customer satisfaction. The Darryl W. Colletti Agency is located in West Babylon.
Joanna S. Fowler, senior chemist at Brookhaven National Laboratory, was named the 2005 Distinguished Basic Scientist of the Year by the Academy of Molecular Imaging. Fowler has worked in mapping monoamine oxidase, a brain enzyme that regulates the levels of nerve-cell communication chemicals, and subsequently discovered that smokers have reduced levels of the enzyme.
Obituary: Joseph Wright
IN AN age when the philosophy that bigger is better was becoming axiomatic with success in all aspects of retail business, Joseph Wright led the struggle for survival of the independent chemist’s shop.
He ran the National Pharmaceutical Association from 1961 until 1981. During that time he was instrumental in making available to the independent pharmacist a range of specialist support services that provided its members with some of the commercial facilities available to the large multiple. These ranged from designing pharmacy layouts to providing marketing aids, business efficiency evaluation to insurance services and technical information. He introduced training courses for pharmacy staff that proved to be a model of their kind. Membership of the NPA thus became indispensable, so that virtually every pharmacy in the UK, with the exception of Boots branches, is now in membership.
Joe Wright’s career as a pharmacist began in an absolutely conventional way. An apprenticeship in Blackpool before he qualified at Chelsea School of Pharmacy led to community pharmacy work in London. This pattern was changed completely by war service in the RAF, during which he was commissioned as a wireless navigator in Coastal Command. After the Second World War, and further study to take a higher qualification in pharmacy, he joined in 1947 the pharmaceutical section of the Ministry of Health.
He soon decided that a Civil Service career was not for him. But the knowledge he gained of the way the Civil Service mind works was to prove invaluable when he was later involved in negotiating the terms by which pharmacists were remunerated for dispensing NHS prescriptions.
Wright left the ministry to take up a job with the organisation which became his life’s work; in 1948 he joined the National Pharmaceutical Union, as the NPA was called in those days. He progressed to the post of Assistant Secretary and then, in 1955, to that of Deputy Secretary. Along the way he had been called to the Bar at Middle Temple.
When the incumbent secretary of the organisation, Harry Noble, retired in 1961, Wright succeeded him. The NPA at that time was faced with many challenges, some deriving from the rapidly changing society of Britain in the 1960s and others from the fact that the NPA itself need modernising. New staff, with different skills, were needed to replace those retiring and to provide the resources required to meet changing conditions.
Pharmacies were (and still are) in a unique position among high- street shops. They derive their income from two quite different sources: running a retail business and providing a professional service. The first is a straightforward commercial operation, and the second is remunerated as a contractor to the NHS. The situation is complicated by the fact that, as a professional establishment, a pharmacy operates under constraints that limit its commercial potential. Both as head of the organisation that supports these commercial activities and, wearing a different hat, as head of the committee which negotiated with the Government on pharmacists’ remuneration for dispensing NHS prescriptions, Wright operated with enthusiasm and skill.
Knowing from his Civil Service experience the sort of evidence acceptable to ministry negotiators, he commandeered academic help to compile statistical data, based on activity sampling and cost analysis, that confirmed the actual cost of providing a pharmaceutical service. The result was a contract based on a formula embracing an added-on cost that was fair to both sides and ran for a number of years. Since that system was abandoned, payment for their services has been a constant cause of dissatisfaction to pharmacists.
Joe Wright was a tough, but fair, negotiator. As an administrator, he developed the NPA and its associated organisations to provide community pharmacists with strengths that, if they had not been available, might have left many to go to the wall. As an individual, he was a genial companion and a dedicated family man. As an employer, he drew intense loyalty from his staff. John Ferguson, a former colleague of Wright’s who went on to head the Royal Pharmaceutical Society (which in 1980 awarded Wright its Charter Gold Medal for his services in promoting the interests of pharmacy), comments that the NPU team was one of the most united he had ever encountered.
Wright was a keen radio ham, an interest he acquired in his RAF days. He had a particular flair for getting on with children, both his grandchildren and others. Many a fractious child has been soothed by his calm and gentle manner. On one occasion, when travelling by plane, an infant in a nearby seat was crying long and loud. Eventually Wright went over, had a word with the mother, and took the child in his arms; the crying stopped immediately.
Joe and his wife Peggy - also a pharmacist - were within six months of celebrating their diamond wedding anniversary when he died.
Edward Boden
DEALS OF THE WEEK
ISA Tlo encourage investors to start an Isa now, in the new tax year, the Canadian stockbroker TD Waterhouse is offering investors a pounds 50 cashback offer when they transfer an existing Pep or Isa to the Waterhouse Freedom Isa. Customers can invest through the Waterhouse Fund Supermarket, which offers 400 eligible unit trusts and OEICs at discounts up to 100 per cent. Call 0845 601 6200 or visit www.tdwaterhouse.co.uk.
INSURANCE Boots the Chemist is making a play for the competitive travel insurance and foreign money market. Its annual multi-trip insurance is from only pounds 49 per person for up to 45 days at a time, and a maximum of 183 days a year, with 21 days’ winter sports.
The single-trip policy starts at pounds 20. The policy offers pounds 250 emergency cash and up to pounds 10m medical cover. The policies also carry special deals on airport hotels and parking, airport lounges and car hire.
Phone 0845 8402020, visit www.bootsinsurance.com, write or visit a Boots store.
Commission-free foreign currency and travellers’ cheques can be delivered to your door next day.
From 1 to 28 May, Boots is offering 500 Advantage card points on travel money. Phone 0845 8406060.
LOANS RAC, the motoring services group that used to be the roadside end of the Royal Automobile Club, has launched a new online personal loans facility, charging only 8.2 per cent for one to seven years, whatever the purpose. The loan carries free RAC membership to non-members, and borrowers can use an online calculator and budget planner to decide their best monthly repayments. Please visit www.rac.co.uk.
Now it’s Boots the dentist
BOOTS THE Chemist is set to become Boots the Dentist under a plan unveiled yesterday. Boots is planning to open six dental practices next year as part of a trial scheme that could see the high street giant expand further into the dentistry market.
The surgeries will offer a mix of private and NHS services and be located in stores or separate high street locations. The move is part of Boots strategy to offer additional health-related services in addition to its chemist business. It already operates Boots the Opticians which has 285 branches. In April it began offering health and travel insurance. Last year Boots announced plans to open six trial doctor’s surgeries in conjunction with medical group Sinclair Montrose. The first two or three should open before Christmas. Boots also began a pilot scheme last year where some stores included service counters advising on skin care, oral hygiene and hair colouring.
“Dentistry in the UK is going through an exciting period of change,” said Steve Russell, Boots the Chemists’ managing director. “The move is a necessary first step in a programme to explore thoroughly the opportunities in the corporate dentistry market.”
The dentistry market is worth pounds 1.9bn a year and grew by 8 per cent last year. Boots needs a capital investment of pounds 3m and revenue expenditure of pounds 7m over the first two years.
Boots is paying pounds 250,000 for Wilson’s Dentistry which is one of 27 Dental Body Corporates in the UK. These bodies enable companies to operate a number of surgeries outside the usual partnership structure.
Boots strategy to extend to additional health-related services is something some analysts have long championed.
Boots targets pounds 1bn market for insurance
BOOTS the Chemists yesterday launched an assault on Britain’s pounds 1bn insurance market with a new range of policies covering health and travel. The initiative is the latest in a series of moves into financial services by Britain’s best-known high
street retailers. Marks & Spencer has been offering pensions and loans for years while supermarkets such as Tesco, J Sainsbury and Safeway have launched telephone banking services and other financial products.
But Boots insisted its move into insurance was not a prelude to a “Boots Bank” and that it would not offer private medical insurance. Steve Russell, managing director of Boots the Chemist, said: “The move is a natural extension of the Boots brand and our overall offer to customers. It takes us into a market which is a natural fit for us and which represents a real commercial opportunity.” Boots is teaming up with Royal & SunAlliance to offer five health insurance policies aimed at family health, pregnancy, dental health, child injury and accident. In addition, there are four travel policies covering single trips or year-round cover as well as a “Gap Year” policy aimed at students working or travelling abroad during their year off between school and university. Royal & Sun will provide the underwriting and claims services and carry the insurance risk. Boots, led by executive chairman Lord Blyth, aims to demystify the purchase of insurance by keeping its literature and sales methods simple. The policies go on sale in 250 of the largest stores from 15 April. Customers will be able to fill in forms in the stores and pay for cover which takes effect instantly. The launch will be backed by a pounds 8m marketing budget, including big in-store promotions. Boots hopes to sell 250,000 polices in the first year and 1 million after five. It claims the business will break even in year one. Boots claimed its prices to be highly competitive. n The dental plan costs pounds 7 a month under the NHS system or pounds 15 per month under a private plan. n The pregnancy policy cost pounds 95 and enables holders to ring a 24-hour information line to talk to qualified midwives and nurses. There is cash for multiple births and additional stays in hospital. n In travel insurance, an annual policy for a family is priced at pounds 89 for a single person and pounds 140 for a family. Boots said its research on customers’ shopping habits showed that after Christmas a high proportion were seeking travel-related products such as sun tan lotion and sunglasses. Analysts welcomed the move saying it was a logical way for Boots to leverage its brand in the health and travel markets. “There is a logical link between selling tanning lotion and travel insurance,” said John Richards at NatWest Securities. “If you have a brand with enormous loyalty then you have the opportunity to cross-sell other products.” Ashley Thomas at SG Securities agreed that it was a positive move but warned that Boots should not stretch itself too far. “They obviously have to be careful not to dilute the brand so they don’t stretch it too much. I wouldn’t want Boots to suddenly go into estate agency or travel.” Another analysts said the move could be good news for consumers who have been angered by travel agents which insist on the purchase of insurance from them when booking holidays. Many consumers have feared they were not being offered the best deal. Boots’ policies will include a 30-day cooling off period and accrue points on the stores’ Advantage loyalty card, which was launched last year. Boots shares rose 12.5p to 918p. Additional reporting by Kerry Benefield Off-the-shelf financial services Tesco Banking and pensions Sainsbury Banking M&S Pensions, investments and insurance Safeway Banking Kwiksave Car insurance Budgens Credit card Boots Travel, health and accident insurance