Promises to keep

Rough Notes, Jul 2001 by Boone, Elisabeth

Central Insurance celebrates 125 years of keeping commitments to policyholders and agents

"He's so responsible." "She's so grownup." Remember gritting your teeth when your parents sang the praises of some impossibly well-behaved classmate or neighbor? You didn't have to be what used to be called a juvenile delinquent to find such child paragons unendurably dull. Maturity and responsibility somehow just didn't seem like important qualities when you had games to play, dares to take, worlds to explore.

Maturity and responsibility likewise don't seem all that important during soft cycles in the property/casualty business, when cash flow trumps underwriting judgment and dangerous risks are written at dimes on the dollar. It's only when the red ink becomes a river that the old virtues begin to take on a new shine, and yesterday's cutthroat competitors become today's somber pontificators.

After 15 years of riotous excess, the long soft market is clearly partied out, leaving in its wake the dull agony of a monster hangover. Not everyone is bleary-eyed and cotton-- mouthed, however, because not everyone went to the party. Fresh, alert, and focused, yesterday's stay-at-- homes are today's go-to gurus, and a sterling example is Central Insurance of Van Wert, Ohio.

Established in 1876 as the Van Wert County Mutual Fire Insurance Company, Central Insurance this year is celebrating its 125th anniversary. Much has changed since the insurers founding-but the small-town values of cooperation, trust, security, and stability remain firmly in place. Come decisions we make affect a lot of people-agents, policyholders, employees-so we can't steer the ship right one day and left the next," says Bill Purmort, chairman and president. Purmort represents the fifth generation of his family to take the helm of Central Insurance. "We're as proud of our past as we are excited about the future."

Diversified group

Central Mutual Insurance Company writes standard risks and is the parent company of the Central Insurance Companies. Another member of the group is All America Insurance Company, a preferred-risk stock insurer that was formed in 1961 to compete with State Farm and Allstate. A third company, CMI Lloyd's, is located in Dallas. The group also includes Central Insurex, an excess and surplus lines agency formed in 1978. The Central group's combined assets exceed $623 million, and it is rated A by Best's.

Of the group's $291 million in direct written premium, 45% is commercial lines and 55% is personal lines. "Because of rate increases, our proportion of commercial business is inching up," Purmort observes. "We're comfortable with a 50-50 split." Adds Edd Buhl, senior vice president and secretary, "Our production is driven by profitability. If we see a better opportunity to make money in personal lines than in commercial, that's where we put our focus."

Central has special programs for light industry, wholesalers, retailers, contractors, offices, service businesses, auto service and repair shops, restaurants, and building owners. Another niche market is professional liability for barbers, beauticians, clergy, dog groomers, funeral directors, opticians, printers, and veterinarians.

Operating through a network of 500 independent agents, Central does business in 15 states: Arizona, Connecticut, Georgia, Illinois, Indiana, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Tennessee, Texas, and Virginia. Regional offices are located in the metropolitan areas of Atlanta, Boston, Dallas, and Van Wert.

Marketing game plan

"Our game plan is to write a lot of business with a small number of agents," Buhl says. "We're not looking to have 1,000 agents. It's less expensive to do business with a small number of agents, and it allows us to develop personal relationships with them. Having a large volume of business with an agency gives us a highly leveraged position in that agency."

Central's marketing philosophy, Buhl explains is, "to allocate premium growth to these states and lines that will produce the greatest return and allow us to achieve the most favorable ratio of premiums to surplus."

Asked to characterize the Central Insurance "advantage" in the marketplace with respect to competitors, Buhl offers a single-word response: "Consistency. Being a mutual, and being a smaller regional carrier, we're very stable in our rate makeup, and we're conservative and consistent in our underwriting. We're highly focused; we don't try to be all things to all people." This philosophy, Buhl points out, is very attractive to independent agents. "The agents who represent us make more money in our company than with any other carrier. We offer competitive commissions and excellent contingencies. We provide training, support, and access to a wide array of technology tools."

On the automation front, Central provides interface, upload, and download with all the major agency system vendors. Agents can quote and issue personal lines policies and some commercial policies via Central's Web site, and they also can initiate claims and billing inquiries. Because of its commitment to maximizing Internet technologies, Purmort observes, Central is able to achieve expense reductions that benefit its agents.