Hanover’s Push into Specialty Aided by Good Communication with Agents

Hanover’s distribution network acts as a good example of how a carrier can do a better job of getting products into the market through active listening.
By: | July 30, 2018 • 5 min read

Distribution is critical for every insurance company. Hanover Insurance Group, a small- to middle-market player with its own network of agents, sees the relationship it’s built with its agency network as a crucial asset and something unique.


The key is a philosophy of responsiveness based on communication, collaboration and trust.

“I love the fact that they listen,” said Charles Brophy, president and CEO, HUB International New England and U.S. East Regional President, HUB International.

“I love that we have access to the senior management and not just from a perfunctory standpoint. They’re sincere about coming back and helping improve our operations.”

Hanover’s manageable size makes that possible.

“It’s not our approach to try to support and service thousands and thousands of agents,” said Bryan Salvatore, executive vice president and president of specialty at Hanover.

“Our model is actually very focused for a company that lives in the small commercial, middle-market space.”

Fostering Relationships

“The depth of that relationship becomes really important to us,” said Salvatore. “From our standpoint, less is more. And doing it right with a select group is more powerful than trying to service a much bigger percentage of the marketplace.”

“We have a kind of a narrow-distribution franchise view,” said Dick Lavey, president, Hanover Agency Markets. “We think about the agent across all of our businesses, and the only way that strategy works is if we have deep relationships, deep and broad.”

Bryan Salvatore, executive vice president and president of specialty, Hanover Insurance Group

This is not to say that Hanover is small: “Over the last 10 years, Hanover has built a good-sized diversified specialty business,” explained Salvatore.

“We have strong expertise, people with decades of experience — dedicated expertise. We basically built a billion-dollar-premium specialty operation.”

But growth hasn’t changed their philosophy.

“They have the horsepower, the financial strength of a large company, the national breadth, a footprint in product,” said Brophy, “yet they still maintain that local touch, and in my opinion, a true caring.”

One way they do that is through a holistic approach, which avoids the silos of some other companies.

“If the agent has customers and product needs or coverage needs that touch seven different areas, we do the work to align internally so we’re doing the best we can to satisfy all those different needs,” said Salvatore. “He’s not having seven different experiences.”

And he doesn’t have to deal with seven people, either: “We have a key point person with that relationship: our regional vice president,” said Salvatore.

“It’s data plus dialogue that really informs us. My priorities are those needs that come out of the sharing of information and the dialogue that comes from the agent.” — Bryan Salvatore, executive vice president and president of specialty, Hanover Insurance Group

Having a single point person provides powerful benefits to agents.

“Time is money,” said Brophy. “We need to drive efficiencies, not only from technology, but in utilization of our time.

“If we can have an individual who takes ownership and will quarterback that opportunity internally instead of us going through all the different silos within Hanover — to have someone that can take it, build it, know where that talent and skill set in this product lie within the organization, and come back to us with a single solution — that’s tremendous.”

The Benefits of Collaboration

Providing that level of integration is no small feat, said Lavey.

“You can’t just snap your fingers and say, ‘I’m going to do the same thing.’ It takes a lot of commitment and time.”

It also takes a philosophy that values collaboration.

“The environment here is quite special,” said Salvatore. “There is not a lot of parochialism or silos … When we’re building out products, when we’re advancing those products, building out capabilities, we’re doing it in a way that says, ‘I don’t know that it needs to be in my unit. It can be in somebody else’s area, but let’s just make sure we work together to manage the outcome.’ ”

That philosophy extends to the top.

Dick Lavey, president, Hanover Agency Markets

“They’re a fairly large company, yet the access to senior management — Jack Roche, Dick Lavey — they’re very approachable,” said Brophy.

“Their willingness to get in the trenches and work with us to come up with a solution for our customers is great. A lot of other carriers — you get the layers. You don’t necessarily have those layers over there.”

That listening has concrete impacts on Hanover. Salvatore cited one particularly resonant conversation with an agent who told him, ‘Don’t just build something and then bring it to me and say, Here it is. As you build it, check with us and make sure it’s fitting what we need in the marketplace.’

“That’s a more informed outcome,” said Salvatore, “that again reaffirms their confidence in us and that the end-product we deliver is stronger.”

According to Brophy, even Hanover’s expansion into specialty is due in part to listening to their agents.

“They were missing out on the opportunity to provide some of the specialty and some of the wraparound coverages,” he said. “So, to their credit, they listened, and went out and got the talent and grew out the program.”

Data, Plus Dialogue

Of course, effective communication is more than listening. It’s asking questions and sharing answers as well. Hanover drills deep into their agents’ books to understand their business.


“We have some proprietary tools that we use to engage with our agents,” said Lavey. “We have different ways to extract data and then present the data back in ways that put a spotlight on what the opportunities are for us, so there’s sort of a series of data extraction and data analytical tools.”

“It’s data plus dialogue that really informs us,” said Salvatore. “My priorities are those needs that come out of the sharing of information and the dialogue that come from the agent.”

That level of communication is only possible with trust: “You’ve got to have trust between the carrier and yourself,” said Brophy, “because you’re divulging all of your customer base, all your expirations, your premiums, your segments of business, your verticals, and enabling them to grab that data, to turn around and come back to you and say, ‘This segment of your business, we think we can improve. We think we can provide a better product.’ ”

According to Brophy, trust pays dividends beyond insurance products. Hanover provides actionable insights in areas such as Insurtech, hiring and retention and more, including some not directly related to Hanover’s business.

“In this day of disruptors and digital interaction and all the different ways customers want to be delivered, we have to listen to the voice of the customer and come up collectively with a solution that resonates with them,” he said.

“Hanover is willing to listen, talk about it and come up with a seamless solution for our clients.”  &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.


Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”


Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.


“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]