March 1, 2005

Relationships Key to Western National's Resurgence

(The following article appeared in the January/February issue of Minnesota Claims Magazine.)

Shortly after Stu Henderson became president at Western National Mutual Insurance Group in 2001, he met with a group of agents. Their message to the new leader of this company that had suffered from several bad years (due largely to unprecedented storms) was: “Let us know what we can do to help you. But don't change the culture of the company.”

“That was when I knew I was part of something special," Henderson said. "During our difficult period from 1998 to 2000, it would have been easy for our agents to leave us . . . but they didn't. That caused us to ask ourselves why they continued to do business with us - even though our prices were not the lowest nor our commissions the highest. We realized they stayed because they liked doing business with us. This is a very strong tribute to our employees and the personal relationships they have built with the agents over the years. Our current average employee has been here for more than 10 years, with many over 20 years. The agents clearly are very comfortable doing business with our staff, and they trust them to do what is right for their customer." Henderson continued, "The Western National turnaround was a group effort. It became clear to us that our company's greatest strength is the relationship we have built with agents and policyholders over our 105-year history. That is why we adopted The Relationship Company as our new slogan. ”

The company's strong bond with its agents and its policyholders has facilitated a stirring recovery. The Edina-based mutual now has a surplus in excess of $110 million (double the $55.3 million the Company had at the end of 2000. They have received 2 upgrades in financial rating from AM Best in 3 years - and are one of only three U.S. companies upgraded in the past two years on merit alone, and not based on a cash infusion from a parent company. This turnaround and relationship building resulted in the preservation of a valuable insurance market for independent agents, and in Henderson being named "2004 Insurance Company Executive of the Year" by the Minnesota Independent Insurance Agents and Brokers'. Western National also has won praise because it distributes solely through the independent agency system, in contrast to several carriers who had been dedicated to independent agents, but have since added alternative and competing distribution systems. Western National seeks to strengthen relationships further by offering agent benefits such as financing through a subsidiary, and sharing company discounts with agents to aid in the purchase of computers.

“At a recent conference one of the speakers forecast that insurance will become a commodity, with price being the only thing determining sales,” Henderson said. “My reaction was if that is the case, we are all in trouble. At Western National we think there will always be a place for independent agents, and for sales based on relationships and not price alone . . . we are betting our future on it.” Henderson noted that even when the company receives an inquiry directly from a potential policyholder about purchasing insurance, the person is referred to the nearest Western National agent.

Henderson adds that Western National is also building its relationship with policyholders. One of the most effective methods is through claims handling. “Paying losses is what we are here to do,” he explained. “I see the claim as our chance to shine for the customer. That is also why, for example, we maintain employee claim staff, and charge only one deductible on joint Homeowner/Auto losses. Most importantly for the customer, we do not add a surcharge to our price after an accident or after most traffic violations - after all, the policyholder bought the insurance to pay for claims, and even the best folks can get a ticket. It is our way of demonstrating to the insured we value them, too. That is also why we do other little things that you would do if you had a relationship with someone, like sending a sympathy card if a policyholder loses a loved one in an accident. A good relationship with an insured translates into a happy agent who will continue to enjoy doing business with us.”

Stu Henderson grew up in western New York State as the son of a part time farmer who worked as an auto mechanic and a carpenter to make ends meet. Henderson thought about becoming a chef or a veterinarian before following his father's advice. “He told me to either become a physician, a dentist or a lawyer,” Henderson recalled. “I did not like blood all that much, so that narrowed my choices considerably.” Henderson worked for a law firm while gaining his undergraduate degree in the New York State University system, and then while earning a law degree from Albany Law School of Union University. He worked in insurance defense before joining the Farm Family Insurance Companies in upstate New York, and then the Gerling Global Reinsurance Companies in New York City. Henderson, who was in his Manhattan office during the 9-11 tragedy, currently lives with his wife and three teenage children in Chanhassen.

For further information, please contact:

Mary S. Manley
SVP Corporate Affairs & Administration

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