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Don't Sell Insurance Like McDonald's, Liberty Mutual CEO Warns

Insurers need to focus more on service and underwriting rather than relying on a price-driven, commodity-based business model similar to the one used by fast-food...
November 28, 2006

Insurers need to focus more on service and underwriting rather than relying on a price-driven, commodity-based business model similar to the one used by fast-food giant McDonald's. That was the recommendation of Edmund Kelly, chairman and chief executive officer of Liberty Mutual. During a keynote address at the 18th Annual Executive Conference for the Property-Casualty Industry, Kelly ranked "differentiation based on service rather than price" as the second-greatest challenge for insurers, directly behind dealing with federal lawmakers on catastrophe and terrorism issues.


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"To truly differentiate on the basis of service in the face of pure price competition requires a much deeper understanding of what customers really want. Our service models will have to change," Kelly said. He also suggested that federal lawmakers could force consolidations of small insurers, citing the example of small insurers wanting a $50 million trigger on federal terrorism coverage. Kelly said that led some lawmakers to conclude that a company that couldn't sustain a $50 million terror event shouldn't be in business.

PIA notes that personal support and service are one of the cornerstones of the PIA Branding Program's local advertising initiative, available to PIA members free of charge.

Don't Sell Insurance Like McDonald's, Kelly Warns (National Underwriter 11/27/06)

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