Though the acquisition of Harleysville Insurance (Harleysville, Pa.) by Nationwide last year somewhat flew under the radar, it represents the third time in the past decade and a half that the Columbus, Ohio-based insurer has pursued a company that distributes its products through the independent agent channel. At a time when the P&C industry is moving toward direct sales, this may seem vexing.
But Harleysville Insurance president Michael Browne, along with SVP Jeff Rommel of Allied Insurance (which was the first of the three independent agent companies acquired, back in 1998) tell Insurance & Technology that Nationwide supports its independent agent divisions strongly. Being part of an organization that offers several products in both commercial and personal lines, and which has the resources to help expand into more states, helps the companies grow, they say.
"There's really a lot of things we now have access to as part of the Nationwide company that we didn't as part of a regional carrier," Browne says. "We go from being a company with $1 billion in surplus to being part of one that has $13 billion. That capacity allows us to write more business. We also get a broader array of products and services: a number of additional products in the P&C space, like Nationwide Agribusiness and Titan Insurance, but we also get access to their financial services products."
"As we come together we become more balanced and really allow us to offer some strengths on both sides," Rommel adds. "We were in 33 states; now collectively we're in a total of 44 states. That really gives us a true national presence as an organization that allows us to, with our large commercial accounts round out accounts in locations that previously we couldn't potentially write."
Rommel says that there were several ancillary benefits that Allied realized when joining Nationwide that weren't immediately obvious at the time of the merger. He's confident Harleysville will find some similar gems in the process.
"We've been able to tap into things like a great claims organization that allows us coast to coast coverage," he says. "There's lots of different options in the company."
Both executives recognize the challenges independent agents face in a world where direct, internet-based sales are gaining popularity. Allowing the independent agent to offer a variety of products is key to reinforcing their value proposition in the market, they say, and that is facilitated by being part of a bigger organization.
For example, Harleysville has traditionally sold more commercial lines than personal lines, with Allied representing the inverse: more personal than commercial. By working together, the companies' independent agents can cross-sell easier, and even offer some non-P&C products that they hadn't before.
"It puts you in a position to serve the independent agents needs whether its personal lines or commercial and allow them to grow their financial services business as well," Browne says. "You think about 2011, it was a pretty ugly year for P&C companies. Both we and Nationwide lost a lot of money. But because of their financial services products Nationwide actually had a good year. It makes us a more balanced company."
And as consumers use the internet as a research tool for financial services products, a well-rounded independent agent can serve as both a consultative voice to help interpret that research, and then turn around and provide the products, Rommel adds. Plus, technology enables agents to do their job better.
"The agents are far more knowledgeable with the tools that they have at their fingertips and then become more consultative. Frankly I think those internet tools complement that," he says. "We find that customers go out and research the products, but they still prefer to go to a local agent to have the purchase made. They like that consultative component that agents bring to them."
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio