Central Mutual: New president, same long-term strategy

Rough Notes, Jan 1995 by McCoy, Thomas A

Two months ago Central Mutual Insurance Company appointed a new president and chief executive officer Bill Purmort III. The new CEO is distinguished both by his youth--he's 38 years old--and the longevity of his family's leadership of Central Mutual--he's the eighth Purmort to head the company since 1877.

What probably matters most to Central Mutual agents about the new president is that he places the same emphasis on steady, long-term agency-company relationships that his father, the late Bill Purmort, Jr., did when he ran the company from 1964 to 1994. "We want agents who understand that profitability results from long-term relationships and commitments," says Bill Purmort III.

The idea that agents and companies can share long-term mutual goals, instead of focusing on short-term niche marketing strategies, might seem outdated to many in company suites. If so, that's fine with Central Mutual. "We hope some other companies keep on doing exactly what they're doing," says Purmort. "We've been able to grow in personal lines because other companies have left that market."

In return for a stable relationship and the use of their products and services, what does Central expect from their agents? "Exactly what we have expected for the last 118 years-solid partnership relationships, a fair share of the available business and a reasonable profit," says Purmort.

Central emphasizes a broad mix of personal lines and small- to medium-sized commercial business, leaning more toward small towns, but writing in metropolitan and suburban areas as well. Over the last three years their commercial lines premiums have risen 32%, and their personal lines by 19.5%.

Purmort projects premium growth of 8% per year through 1997 which would bring their premiums to around $240 million.

Central has 650 agencies, a number that has stayed pretty steady over the last decade, and they write business in 15 states. (See box on page 53).

Long term relationships start with managers

It's logical that Central would cultivate long-term relationships with its agencies because the company also favors keeping its underwriters, regional managers and other executives in their positions for the long term. "They grow their own managers," says Bob Hamby, president of Hamby & Alosio, a $45 million agency in Atlanta which has represented Central since the agency's founding 23 years ago. "They start out as young people and stay there 20, 30 or 40 years. When someone gets to the top, they never forget how they got there."

That's in stark contrast to other carriers, Hamby points out. "Some companies are like baseball teams. The managers go from company to company. Someone who is a senior underwriter has been there two years. At Central the senior underwriter doesn't accomplish that goal for 10 or 15 years."

Wes Bailey of Bailey Insurance in Waco, Texas, a Rough Notes Marketing Agency of the Month, thinks the longer tenure of Central's employees is a significant benefit to an agent. "We've found with Central Mutual that we're able to develop relationships with people that last year after year instead of changing every six months with a new underwriter or regional manager. Dealing with Central Mutual is like going back 25 years when you had more of a relationship with your carriers."

Bailey recalls instances of phone calls and personal visits to the agency from Bill Purmort, Jr. when he was president of Central. "They have a personal touch that you just don't see very often."

Roy Lein, who has served as vice president and regional manager for the southeast region of the company since 1974, is a good example of a long-tenured Central Mutual regional manager who has built a personal relationship with agents. During those 20 years the volume in the southeast region has increased from about $5 million to about $65 million.

"Agents are our customers," says Lein, "and they become our friends too." Many times, he says, friendships develop as a result of trips for the agents to the company's Van Wert, Ohio, home office. The company awards these trips to agents who serve as "Inner Circle" advisory council members. In Lein's territory close to half of Central's agents qualify for one of three Circle programs based on profitability and volume.

An unforgettable welcome to the home office

Listening to Tom Watson, president of the Watson Agency in Gastonia, North Carolina, it's not hard to see how such trips can evolve into friendship. Watson, whose 71-employee agency has represented Central since 1933, was one of 30 to 40 agents who attended an Inner Circle reunion in Van Wert, Ohio a few years ago.

"We stayed in nearby Lima, Ohio," Watson recalls, "and the third day we were there we got on a bus to ride over to the home office. Just ahead of us, ushering us into town, was an antique fire truck, driven by Bill Purmort, Jr., who was then president of Central. Bill was wearing a fire hat and seated next to him in the truck was a Dalmatian dog. (The fire truck was normally on display in Central's fire museum housed in the home office.)