Printer Friendly

A mutual mainstay: while some mutual insurance companies have opted to shed their mutuality over the years, Amica, America's oldest mutual auto insurer, remains steadfast in the model.

Amica Mutual Insurance Co. Chairman, President and CEO Robert A. DiMuccio says if there's one thing he's learned during his 26-year tenure with the Lincoln, Rhode Island-based mutual, it's that being innovative and agile is vital to the company's growth and viability going forward.

And mutuality, he said, has a large hand in making that happen.

The world is changing, as are policyholders' needs, "so we must be ready," said DiMuccio. "Mutuality helps to fuel agility and innovation so we can create ways to share risks with our policyholders, better meet their needs, establish levels of trust and remain close to them, especially as a direct writer."

That's already playing out in some of Amica's recent innovations, including the deployment of a new core billing system; the completion of another phase of its core auto policy system; the introduction of several next-generation technologies, such as cloud, analytics and big data, to improve service and reduce loss adjustment expenses; and the company's ability to function as a virtual call center.

DiMuccio, who began his career withAmica as vice president in its accounting department and was named to his current role in 2005, believes the ability to quickly adapt to changes in the market will also help Amica--America's oldest mutual auto insurer--gear up for upcoming changes in the auto market. These changes include the placement of autonomous vehicles onto U.S. roadways, new and changing coverage options and costly repair bills for self-driving vehicles.

Mutuality has served Amica and its policyholders well for 110 years, he said.

Last year, the mutual model, "which allows us to maintain a financial position through our wellmanaged investment portfolio and conservative business philosophy," helped the company overcome a series of challenges, including a significant number of auto claims, mainly arising from industrywide trends like the growing number of drivers on U.S. roadways and an increase in distracted-driving-related accidents, and a spike in homeowners losses largely generated by hailstorm and tornado claims in the Midwest and Southwest, DiMuccio said. Policyholders in several states were also hard-hit by Hurricane Matthew last October.

Despite those losses,Amica still ended the year with a solid balance sheet. The company reported a record high for earned premiums at more than $2 billion and a net income of $ 146.1 million, according to A.M. Best. It has a Best's Financial Strength Rating of A+ (Superior). Amica Life Insurance Co. had a rise in assets, to $1.24 billion, and net income more than doubled to $10 million, A.M. Best reports.

The company also continues to pay a dividend to policyholders in many of its states and lines of business. "That really sets us apart, along with our unique distribution model. All mutuals feel close to their customers, but we feel particularly close to them as a direct writer," DiMuccio said.

Amica is committed to maintaining its mutual structure, DiMuccio told 1,700 attendees at a recent technology conference in San Francisco. Combined with the company's financial stability, the model provides exceptional security for policyholders, he said.

Standing Firm

Over the years, DiMuccio and his team have weighed the pros and cons of Amica's mutual status.

However, they remain firm in the belief that's the best fit for the company.

"We look at the value and strength of remaining a mutual and every time we come to the same conclusion that maintaining our mutuality and this concept of shared risk that's part of that model allows us to make very long-term decisions for the company and our policyholders," he said.

There's a misconception in the industry that mutual insurers have the luxury of taking their time to do things, said James Loring, chief financial officer at Amica. "But that's not how we think about things here.

"We have to remain competitive to keep up with all the changes going on around us and to remain focused on our risks," he said. "That's central to what we do daily, and it allows us to balance our growth, profitability and surplus, which ultimately benefits our policyholders."

Amica was built on the mutual model at the turn of the 20th century. In 1907, A. T. Vigneron believed horseless carriages were going to completely change the American way of life, so he created the Automobile Mutual Insurance Company of America to write policies for preferred risks, offer lower auto insurance rates and create peace of mind and enduring relationships.

That's much like the mutual insurance concept itself that originated centuries earlier based on a simple goal--to create lasting relationships between property owners searching for a way to share risks within a large group.

In 1914, Factory Mutual Liability Insurance Company of America was chartered to provide liability insurance to Automobile Mutual's policyholders. Six decades later, the companies merged to form Amica and create a more efficient corporate identity, DiMuccio said.

Today, the multiline carrier has more than 1.5 million auto, home, life, marine and personal excess liability policies in force in 49 states, serviced by 44 offices across the United States. Amica is ranked the 18th largest homeowners insurance writer and the 23rd largest private-passenger auto insurer in the U.S., according to A.M. Best.

Personalized Touches

One of the strengths of the mutual model is its intense focus on policyholders.

And the customer-centric approach and innovative steps mutuals take to improve customer interactions offer them a leg up in the industry, DiMuccio said.

"We take pride in our mutuality, and the model helps keep us very closely aligned with the needs and preferences of our customers and creates an affinity culture and personal ties," he said.

Over the years,Amica has been recognized for its commitment to those relationships. Each year, J.D. Power, a global consumer insights and advisory services firm, surveys thousands of customers by asking them to rate their satisfaction with their homeowners, renters, auto and life insurance companies. In 2016, Amica earned the highest levels of customer satisfaction among national homeowner insurers in J.D. Power's U.S. Home Insurance Study for the 15 th consecutive year. This year,Amica tied with Hanover Insurance for the top spot in overall customer satisfaction among homeowners filing property claims.

"I can't take any credit for those awards," DiMuccio said. "They belong to our reps on the phone or in person helping insureds with thousands of interactions each day."

Those more than 2,000 representatives, along with its employees and policyholders, are part of what DiMuccio calls the Amica family.

"Our people know how to go the extra mile, and we are, first and foremost, a people business," DiMuccio said. "It begins with our employees who care about each other and it becomes a way of life. We've delivered on that promise for more than 100 years.

"We have a customer-centric focus, and we spend a lot of time training our employees and offering long-term leadership development programs," he said. "We also spend time making sure employees understand our culture and the ways they can build networks within the company"

That also helps personalize the customer experience, DiMuccio said.

"We're an industry that deals one-on-one with customers in some of the most complex product purchases they make. And I think empathy can differentiate a company when it comes to the customer experience," he said."We deal with folks, particularly with personal lines, often during significant events in their lives. The purchase of new vehicles. Buying a new home. A tragic event where there's been damage or a fire to a home. In every situation, they want to have an empathetic person on the other end of the phone, online or across the desk from them."

That's paying off, said DiMuccio, who shared the story of a recent call between a claimant and one of Amica's customer service representatives. "When the insured called Amica, the first question the representative asked was,'Are you and your family OK?'The insured said she knew then that she and her family were going to be well taken care of."

Tech Approaches

Amica is leveraging digital tools and other technologies to help improve those kinds of customer interactions.

Several years ago, the company integrated geographic information system technology into its Guidewire claims management system to provide claims handlers a quick glimpse at an insured's risk location. The system also examines how claims correlate with the location of a catastrophic event.

Another thing that sets Amica apart from its mutual peers is its ability to function as a virtual call center, DiMuccio said. In 2014, Amica began using Semafone's secure payments technology to handle payments taken over the phone by representatives in the company's 44 branches and customer call centers.

Amica now also has six round-the-clock service and sales centers. "During the day, reps in our branch locations handle most of the incoming calls, but after hours we rely on back-up centers to service customers when and how they want to communicate with us," DiMuccio said.

Focusing on the Future

Technologies like that are helping Amica live up to the customer satisfaction standards that have defined the company for more than a century.

But that's just part of the process, DiMuccio said.

"There's always some piece of software we can buy or some operating system we can replicate, but the secret sauce is the little things our employees and representatives do for our customers each day, whether it's returning a phone call when they say they will or helping them find an answer to a question."

That's part of the mutual promise, he said.

Mutuality also offers Amica a long-term view of its markets, DiMuccio said. "When we establish a relationship with a new customer, we're thinking 50 years from now. If someone is purchasing their first car or home, we'd like to develop a 50-year relationship with them that will transcend any quarterly financial obstacle. That's the strength of us as a company and the mutual concept."

Mutuality also helps prepare the company for future changes, such as autonomous vehicles.

"This isn't the time to get complacent; we have to be ready," DiMuccio said.

"Do I foresee fewer accidents in the future because of autonomous vehicles? Yes. Do I see coverages changing because of those vehicles? Yes, most likely into some sort of combination product of commercial and personal lines policies. Do I expect more expensive comprehensive and collision costs? Yes, we're already seeing it now," he said. The bottom line is that while autonomous vehicles will likely drive down frequency, severity will increase--a trend that's already shaking out in the market with the current generation of vehicles, he said.

Auto isn't the only market set to see some changes. DiMuccio foresees growth in both the life and personal umbrella lines, along with changes in the property market with the advent of smart homes.

"The thought of having multigenerational relationships around those coverages works perfectly with the mutual concept," he said. "And the fact that Amica still pays dividends in many states speaks to the sharing of risk and rewards that our members receive from a mutual."

One of the concerns mutuals often have is limited access to capital, Loring said. "But if you go back through the decades, mutuals have been able to access capital whenever they needed it. We're no different. Reinsurance, for example, is capital in a broad sense, so there are different ways to get at it."

Customized or tailored reinsurance arrangements, alternative risk transfer solutions and insurancelinked securities, alongside insurtech developments, are expected to help mutual insurers grow their businesses and compete, according to global reinsurance firm Swiss Re's 2016 sigma report.

"I think the mutual model will work long into the future," DiMuccio said. Sometimes some of the best investors who enjoy long-term success are referred to as "patient capital," or a financial investment in a business that investors are willing to make with no expectation of turning a quick profit, he said. "By definition, a mutual company is patient capital."

DiMuccio expects Amica to remain steadfast in its mutual model. "We're trustees of capital and our job as management and the board is to grow that capital and pass it on to the next generation of policyholders as strong, or even stronger, than we've done before," he said.

Key Points

Through the Years: Amica has relished the mutual model for 110 years.

Making Their Way: Digital technology and a focus on customer-centric approaches are helping the company better connect with policyholders across the country.

Tomorrow's Another Day: The company is gearing up for impending changes to its largest product lines, including autonomous vehicles.

LOOKING TO THE FUTURE: Amica Mutual Insurance Co. Chairman, President and CEO Robert A. DiMuccio believes mutuality offers the company a long-term view of its markets. "When we establish a relationship with a new customer, we're thinking 50 years from now. If someone is purchasing their first car or home, we'd like to develop a 50-year relationship with them that will transcend any quarterly financial obstacle."

Learn More

Amica Mutual Insurance Company (A.M. Best # 002162) For ratings and other financial strength information visit

Lori Chordas is a senior associate editor. She can be reached at fori.
Geographical Breakdown--2016 Direct Premiums Written ($000)

Texas              $313,233
Massachusetts       245,613
Connecticut         187,615
Rhode Island        162,558
Florida             152,162
New York            148,411
California          125,655
North Carolina       80,555
Georgia              70,795
New Jersey           60,968
All Other           551,315

Source: (BESTLINK) Amica Mutual
Insurance Co., A.M., Best # 002162

2016 Top Lines of Business

Other Liability Occurences          2.8%
All other                           3.4%
Auto Physical                      23.2%
Private Passenger Auto Liability   34.5%
Homeowners                         36.1%

Source: <bestlink> Amica Mutual Insurance Co.,
A.M. Best #002162

Note: Table made from pie chart.

Net Premiums Written
($ Million)

2012   1,633
2013   1,746
2014   1,841
2015   1,942
2016   2,086

Source: BESTLINK Amica Mutual Insurance Co.,
A.M. Best # 002162

Note: Table made from bar graph.
COPYRIGHT 2017 A.M. Best Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2017 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Mutuals
Author:Chordas, Lori
Publication:Best's Review
Date:Sep 1, 2017
Previous Article:2016--Property/casualty mutuals, reciprocal exchanges and cooperatives.
Next Article:Changing times, changing measures: American Family Insurance is broadening its corporate footprint while remaining committed to its mutual heritage.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |