Safeco Gears For Direct Auto Marketing

Seattle-based insurer Safeco is seriously planning to enter the direct marketing of its auto insurance business over the Internet to reach consumers it isn't reaching.  
 
Michael LaRocco, president and chief operating officer, said the carrier has approached its independent agent partners to field suggestions and get feedback on its plan to try and capture a customer demographic it is failing to access.  
 
"We have made no final decisions," said Mr. LaRocco. "What we have very seriously decided to do is investigate the possibility of supplementing the independent agency channel with some direct sales, on a very limited basis, of our automobile insurance policies through the Internet.  
 
"Our belief is that it's the right strategic decision, so we will probably move forward," he said.  
 
He said the company has shared its plans with its independent agency partners to get input from the agents in developing the site further.  
 
Mr. LaRocco pointed out that Safeco is the last remaining national property-casualty company that has yet to branch out into more than one line of distribution. Independent agents will remain the company's primary method of distribution, he emphasized, but the company cannot ignore a growing number of potential customers who prefer to do their shopping and buying over the Internet.  
 
"To be fair to our shareholders, our employees and our independent agency partners, we have to be a strong company," he said. "When the demographics are so dramatic and show a huge core of consumers who choose to purchase their insurance primarily over the Internet directly from the company, we need to do that."  
 
These consumers, he said, are people the company is missing otherwise, and by opening up this outlet, both Safeco and independent agents can eventually gain more access to them.  
 
He noted that the customers the company is missing are people who prefer not to deal with a middleman. But the hope is that by capturing these new customers, both Safeco and independent agents will learn how to market to them.  
 
He said the direct market would be a very small part of Safeco's business, and the company does not plan to invest the millions of dollars others have in the past.  
 
If it does decide to go forward, the company would begin its direct marketing sometime in early May or June, but not before it has completed listening to its agents.  
 
"We are getting great feedback from our agency partners," he noted. "It is really informing some of the detail, if we did go forward."  
 
Not everyone will like the idea, he said, but the company wanted to make sure it had enough time to hear from its agents and incorporate their ideas into the Web site.  
 
He said the launch would be very limited in scope, a campaign targeted to where the company does not have much access today.  
 
"I want to emphasize that this strategic move to supplement the agent with a limited amount of direct business can be perceived in different ways, but we truly believe this is a good move," said Mr. LaRocco. "This is an opportunity to get customers we are not getting, and what we learn from this we are going to share with our independent agents. I think it is going to be a win-win in the end."  
 
The company also announced last week that it is offering its workers' compensation product on a stand-alone basis in 25 states. Previously, the line was sold in 39 states as a supporting line to businessowners or midmarket package policies. The monoline product covers small and midsized risks with a policy premium up to $25,000.  
 
The states are: Arkansas, Colorado, Connecticut, Georgia, Idaho, Iowa, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, Nevada, New Hampshire, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia and Wisconsin.