Enhancing Customer Engagement in P&C Insurance

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Interviewer notes:

Robert (Bob) Whitlock has a prominent 40+ year career in insurance, including over a decade as CEO of The Philadelphia Contributionship. After his retirement from the Contributionship, colleagues at a CEO roundtable introduced Bob to Kaenan Hertz from Insurtech Advisors, and I was lucky to have Kaenan introduce Bob and me.

In our first conversation, I was overwhelmed. Bob has such a diversified insurance career, including successful actuary, underwriting, chief actuary, and CEO positions, incorporating advanced technology, and being the head of the oldest insurance company in America (older than the USA itself).

In this interview Bob shares with us the story of The Philadelphia Contributionship and discusses the opportunity for insurers to improve customer engagement beyond the sale, bill, and claim touchpoints.

This is a fascinating discussion that can only be conducted with someone like Bob who is both an accomplished actuary and CEO.

David Schapiro (DS): Could you please tell us a bit about yourself and how/why you decided to establish your career in insurance?

Robert Whitlock (RW): As you mentioned in your introduction, I recently retired after serving for 10 years as president and CEO of The Philadelphia Contributionship. My path to that position may have been a bit atypical but was one that I was very fortunate to have followed. Like most of us in the insurance business, I did not have a long-standing plan to enter the industry. Instead, I was introduced to the idea by chance.

I majored in math at Lafayette College and was struggling to decide what to do with that education. While in the math department offices, I saw a brochure on the bulletin board that said: “Be an Actuary.” That was the first time I had ever seen the word “actuary.” As I learned more about the profession, it seemed like one that would be a good fit for my skills and interests. So, I decided to pursue that path and began taking the actuarial exams.

My first job was with Prudential Property and Casualty Insurance Company (PRUPAC) in their actuarial training program. Looking back, that experience really shaped my career path in the years to come. The program included a job rotation plan where you were assigned to a department for 12–18 months, then moved to another spot and so on. The idea was to give participants a broad view of insurance operations. In my time at PRUPAC, I had three rotations, two of which were in underwriting departments, giving me a good foundation of how the various disciplines in insurance interrelate.

As my career progressed, I had the opportunity to serve in a number of actuarial roles, leading to a time as a chief actuary. But along the way, I also served in both product management and underwriting positions, leading to a time as a chief underwriting officer of a super-regional company with responsibilities for both personal and commercial lines.

All of that prepared me for my time as CEO of The Philadelphia Contributionship. With the historical significance of that company, it was an honor and privilege to serve in that role.

DS: Although The Philadelphia Contributionship is the oldest insurance company in America, it appears to also be one of the industry’s best-kept secrets. Could you please share with us its story?

RW: To be more precise, The Philadelphia Contributionship is the oldest successful insurance company in America. It, in fact, is not the first. The Friendly Society of Charleston, South Carolina, was established in 1735 but was bankrupted when a fire destroyed much of Charleston in 1740. From that time until 1752, there were no fire insurance companies in the colonies. The risk of fire was high in Philadelphia during that time, and the city was ill-prepared to deal with it.

A pivotal event occurred in 1730, when a fire destroyed businesses on Fishbourn’s Wharf on the city’s riverfront and several nearby homes. The city purchased firefighting equipment after that fire, but Benjamin Franklin, who was the city’s foremost proponent of fire prevention, recognized that simply having that equipment was not enough. The city’s weakness was in the disorganized efforts of its citizens in firefighting. So, in 1736, Franklin formed the first volunteer fire company in America: The Union Fire Company.

It was at a meeting of the Union Fire Company in 1751 that the idea of an insurance plan was first discussed. Franklin and his colleague, Phillip Syng, were assigned to meet with representatives of the six other fire companies in the city to discuss the idea. An agreement was reached to move forward to form an insurance company. In February of 1752, a notice appeared in Franklin’s newspaper, The Gazette, announcing the new venture and inviting Philadelphians to sign up. By April of that year, there was enough interest to call a general meeting to form the company, and directors were elected. The first policy was issued on June 2, 1752.

Many of the first policyholders were prominent citizens of the time, including three signers of the Declaration of Independence (John Morton, John Morris, and Benjamin Franklin) and the fourth President of the United States, James Madison.

For the next 268 years, The Philadelphia Contributionship has maintained continuous operations, through wars, recessions, depressions, and tremendous change in the industry. Today the company writes personal property and related liability coverages and operates in five mid-Atlantic states.

DS: As The Philadelphia Contributionship is older than the USA and was over 100 years old during the Civil War, are there some interesting stories from its history you could discuss?

RW: As you might imagine, with over 268 years of history, there are many stories to tell. I always thought it gave perspective to think about how the company connected to the growth of the nation.

Yes, The Contributionship was a company before there was a country. In the museum area of the office, the first financial statement of the company is kept in a vault. Those figures were expressed in pounds and shillings. It was well before the dollar existed.

The founders of the company were very much connected to the formation of the new nation. Franklin is the most famous, but others were involved as well. For example, Phillip Syng, Franklin’s fellow firefighter, was a silversmith by trade. In fact, he made the inkstand that was used in the signing of the Declaration of Independence in 1776 and the United States Constitution in 1787. Syng also designed the four clasped hands that are on the company’s fire mark. The first cast of that symbol was made by John Stow, who was one of the foundry workers who recast the Liberty Bell after it cracked.

The company was in its third decade of operation at the time of the American Revolution. There was a wide range of opinions about the war within the company’s leaders. Some were Loyalists, other prominent Patriots, and still others, as Quakers, remained neutral. But the company made it through the war years intact, including during the British occupation of Philadelphia in 1778.

There was some dissension in the company in the late 18th century. Among the underwriting guidelines was The Contributionship’s refusal to insure houses with trees in front of them because the trees could hinder firefighting efforts. When that requirement was affirmed in 1784, some policyholders, rather than cutting down their trees, broke away from The Contributionship and formed its first competitor. They founded The Mutual Assurance Company, which was willing to insure properties with trees. That company came to be known as The Green Tree (for obvious reasons) and remained in business until 2005.

One of my personal favorite stories is captured in the company minutes, which are available to see on the company’s website. Unlike during the Revolution, during the Civil War, the company was firmly behind the Union cause. In 1863, there was great concern that if the Confederates took Gettysburg, they would continue to Philadelphia. So, The Contributionship held a special meeting of members where it was agreed that the company would donate $20,000 to be used for the defense of the city. As history would have it, with the Union victory at Gettysburg, Philadelphia remained unscathed.

Fast-forwarding to the 20th century, the company was deeply impacted by World War II, when its staff was depleted by employees joining the war effort. One of those employees was Harriet Matlack, who joined the Navy’s Women Accepted for Voluntary Emergency Service, commonly known as the WAVES. Harriet ultimately served as secretary to Admiral Chester Nimitz, who was commander-in-chief of the United States Navy’s Pacific Fleet.

Those are just a few of the stories among many in The Philadelphia Contributionship’s remarkable and rich history.

DS: Having experienced the key components of P&C insurance for decades, including actuarial, underwriting, and executive management responsibilities, could you please touch on some of the points of improvement we could address in insurance?

RW: There has been a great deal of change in my 40 years in this business. But one thing that has not changed much is the fact that the insurance industry does not have a positive image in the eyes of consumers. There are many reasons for that, not least of which is the plaintiff bar’s portrayal of insurance companies as the enemy with less than altruistic intent. That said, I think the industry has remained too internally focused and, as a result, is less connected with its customers than other industries. So, I think there is much room for improvement in the area of customer engagement.

This is particularly true in personal lines. In general, personal lines customers interact with their insurance company in three ways: initial sale or policy changes, billing, and at the time of the claim. None of those are particularly positive events. And to make those experiences more impactful, we invite the customer to opine on those experiences and shop the policy at each renewal.

This has resulted in a more transactional relationship and a commoditization of the product with an emphasis on price over service and overall value.

DS: How would you see insurers turning this challenge/weak-point into a business opportunity?

RW: Sticking with personal lines, I think the opportunity for insurers is to find positive ways to interact with their customers during the policy period between those less favorable transactions. That would provide more touch points for the insurer to build a history of positive experiences with their customers. Those interactions could be value-added services or, perhaps, providing helpful information that could increase awareness and mitigation of the risks they face. The idea is to provide a different “experience” for the policyholder that they may not expect from an insurer. In this experience economy, where consumers are looking for more than a simple purchase or other transaction, I think this kind of activity from an insurer would help create a degree of loyalty, improve retention, and add to the lifetime value of the customer.

Of course, none of this would be a replacement for high-quality service at the time of a claim. Fast and fair settlement of covered claims with clear communication along the claim lifecycle is critical to the customer. But not all customers have a claim, so those interim experiences are an opportunity to impress those without a claim, bringing additional perceived value for premiums paid.

DS: How could insurers potentially implement this change?

RW: I think there is a wide range of ways that insurers could implement this kind of approach, from simple service-related actions from people to higher tech, data-driven options. On the low-tech end, companies could simply reach out to customers periodically, either electronically or personally, to push helpful information. For example, companies could push severe weather alerts to property customers along with recommendations on what to do to secure property. Perhaps insurers could partner with companies that sell products that avoid or mitigate loss to offer preferred pricing on those products to customers. There has been a lot of activity around water leak detection devices, but other products could be helpful as well, say automatic electric generators.

The Internet of Things provides a wealth of opportunity for a more high-tech approach. As data is collected from connected devices, the need for maintenance or replacement could be predicted and communicated to policyholders before the device fails. InsurTech companies could play a role in aggregating data and using artificial intelligence to produce predictions, generate alerts, and help insurers communicate them to customers. Again, the idea is to provide an unexpected positive experience to the customer. I doubt that today many people would expect to learn from their insurance company that their dishwasher is about to have a problem!

In addition to the customer engagement benefits that this approach could provide, I think this could nudge the industry from simply a means to indemnify after a loss to one that is closer to loss prevention and mitigation – a more complete risk management service.

I’ve focused on personal lines, but there is likely a multitude of possibilities in other lines as well. The general case is for insurers to engage with their customers more frequently and in unexpected ways that add value to the experience.

DS: Are there any final thoughts that you would like to share?

RW: There can be some speed bumps in this approach. We all are bombarded with emails and text messages these days. So, a question is: How much contact is too much contact? Cross that line and there is risk of alienating the customer.

There are agency considerations too. For companies that are using the independent agency distribution system, consideration should be given to the impact this approach might have on their agents. My experience is that many independent agents often prefer to completely own the relationship with the end customer and balk at direct communication from insurers. Finding an appropriate balance that works for all involved is important.

I’ll finish where I started. The image and reputation of the industry could be better. Focusing more externally on the customer experience can be a step toward improving that image and provide benefits for both insurers and insureds alike.

Bio for Robert G. Whitlock, Jr, FCAS, MAAA
Bob Whitlock has recently retired as President and Chief Executive Officer of The Philadelphia Contributionship, a position he held since 2009.

Prior to joining The Contributionship, he spent 18 years with Harleysville Insurance Companies, where he held a number of positions including three years as Senior Vice President and Chief Underwriting Officer and 10 years as Senior Vice President and Chief Actuary.

His previous experience also includes CIGNA Insurance Companies in Philadelphia, PA, Hastings Mutual Insurance Company in Hastings, MI, and Prudential Property and Casualty Insurance Company in Holmdel, NJ. Bob served as a member of the Actuarial Science Industry Advisory Board at St. Joseph’s University, is a past member of the Board of Directors of the Insurance Society of Philadelphia, and is past Chairman of the Pennsylvania Association of Mutual Insurance Companies (PAMIC).

He has served as a member of the boards of various other industry organizations. Bob is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. He is a graduate of Lafayette College in Easton, PA, where he earned a Bachelor of Science degree in mathematics.

He and his wife of nearly 40 years, Angie, have four married daughters and five grandchildren.

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