New CEO of Grange Insurance is intent on improving the company's performance with commercial lines and filling workforce gaps.
Barely two months into his new job as CEO and president of Grange Insurance, John Ammendola outlines a vision of what he wants to accomplish however long he sits in the top chair at the Columbus-based company.
"As a steward of this company, I want to assure a decade from now that I've prepared the company to be a thriving one," he says.
Reaching that goal might be easier given the track that Grange has put itself on as it works toward solidifying its place among the top insurers in Ohio. The trek, however, is not without challenges. Trends that all insurers are facing, plus Grange's goal of bolstering its commercial lines sector, will present obstacles for the mutual insurance company.
Ammendola, 48, joined Grange in 2010 to lead its personal lines business, which returned to profitability under his watch, and in 2013 he became the company's chief property and casualty officer. During his tenure, new products have been introduced and additional investments in commercial lines made. The latter is where the chief executive, who replaced Tom Welch, sees opportunities.
Grange has consistently ranked among the top 15 insurers in the state when it comes to market share for all lines of insurance, Ohio Department of Insurance data shows. From 2010 through 2013, the company was among the top 10 with an Ohio market share that fluctuated between 3.6 percent and 4 percent.
For 2013 overall, Grange recorded $50 million in net income on premiums earned of $1.18 billion; increased its direct written premiums by $73 million; and increased its policyholder surplus to $1.09 billion.
It's a different picture when breaking out commercial insurance-and one Ammendola wants to change.
Between those same years, Grange never cracked the top 15. While neither inclusive nor indicative of the company's overall health, it is an area for improvement.
"We are just not getting our fair share of it," Ammendola says.
Grange's personal lines-auto, home and life-comprise 70 percent of its business, with commercial consuming the remainder. The CEO says he'd like to see a 50-50 split over the coming years.
Two commercial products launched over the past two years take direct aim at the objective.
AutoAccel, introduced in 2006 as a way for its 3,600 independent agents to provide specialty commercial auto coverage to businesses with vehicle fleets, has been a hit.
The product was reintroduced in 2014 a year after the second product, BusinessAssure, became available. That business insurance policy provides coverage for building and personal property, equipment breakdowns, a loss of business income, and a host of optional riders including fraud and earthquake protection.
The two are among the company's best-selling commercial products.
When Grange Insurance decided to re-roll out AutoAccel, it ensured that independent agents were made part of the process. The company also narrowed the marketing focus to areas where the product would work best.
"We brought them into the development process, and as we learned from them, we could make changes based on their feedback," Ammendola says.
Independent agents are Grange's lifeblood. "I've been hearing for the last 25 years that the independent agent is dead," Ammendola says, "but they are the fiber of many communities."
Agents have been tested in recent years with the prevalence of online insurance carriers. However, Ammendola says insurance is a value proposition, and that makes the counsel an independent agent provides all the more important.
"Agents have to make sure that they are not falling prey to the it's-all-about-price thinking, he says. " Turning that customer into nothing more than a commodity doesn't do anyone any good."
Trends Ammendola sees the insurance industry facing:
• Changing and sometimes severe weather patterns have all insurers re-evaluating the coverage offered to consumers. It's one of those trends that could be ongoing for a while.
"If we don't stay disciplined … the cost of insurance will become unbearable. We've had to think differently about the homeowner proposition," he says, adding that deductibles have been increasing the past five years.
• Ammendola says low interest rates and surplus capital sitting on the sidelines are items to watch as well.
A January Deloitte report says alternative investors have pumped a lot of money into the property and casualty market, creating extreme capacity, which in turn raises concerns for insurers' return on equity. The Property and Casualty Association of America estimates that capacity at $673 billion.
Historically low interest rates are affecting yields on investments, giving insurers' pause on pricing their products and their potential return.
"It certainly leaves no room for mistakes on underwriting," he says.
Ammendola came to Grange right before 13 Ohio insurance companies as a whole began addressing the oncoming talent gap the industry is facing. A 2013 study by Regionomics showed a need to fill 26,000 positions by 2020. Most of the expected vacant jobs are due to retiring Baby Boomers.
Although the CEO says retention rates at Grange are strong, the company is taking steps to make the business more attractive. Already in place are its Women's Leadership group and a committee called Young Professionals whose mission is attracting young people to work for the insurer. The insurer also has plans to hire a diversity and inclusive manager.
Ammendola says many people don't realize the breadth of jobs within the industry, which is going to experience this "huge wave of people" leaving it.
"Insurance isn't a sexy proposition … but there are a lot of dynamic positions here. We have technology jobs, we have big data jobs, and we have predictive modeling jobs. We just have to sell it."
A music aficionado-but don't try to pin him down on a favorite genre-the CEO had been eying the top job for a few years. He interviewed for the spot during the same round of interviews from which Welch was hired. As the official conductor for his Grange orchestra, so to speak, Ammendola says he knows everyone will be watching his cues.
"My management style is very aggressive. I like to lead out front, and I crave candor and engagement."
Craig Lovelace is a freelance writer.