Shenandoah Life Insurance: Fresh Ideas - American Executive - RedCoat Publishing - American Executive

Shenandoah Life Insurance: Fresh Ideas

Insurance
Written by G. Jeffrey MacDonald
Monday, 01 October 2007
As a mid-sized player, this life insurance company has to find creative ways to grow. Growing sales is never easy, but it’s especially difficult in a mature industry where the competition includes some of the best-financed companies in the world. That’s the challenge perennially facing Shenandoah Life Insurance Co., a Roanoke, Va.-based insurance company with $1.8 billion in assets, $261 million in revenue, and about 300 employees. Those numbers might seem pretty big, but in the heavy-hitting universe of insurance, they’re just enough to qualify Shenandoah Life as a mid-sized player. What this means for day-to-day business is that Shenandoah Life has to finance new product development and other costs without capitalization from shareholders. Organized as a mutual insurance business, the company has a charter that prohibits it from being sold, and therefore outside investors aren’t part of the picture. It’s owned by policyholders, not shareholders. Nevertheless, the company continues to innovate and grab marketshare in key areas that help boost its bottom line. The approach used by Shenandoah Life executives might stimulate fresh ideas for other executives confronting similar challenges in their own industries. “We’re competing against companies of tremendous size,” said Robert Clark, president and CEO. “We’ve been very successful in premium growth by getting out there and using innovative approaches to design products and finding new ways to deliver products.” Robert Clark, President and CEO Branching out Over the course of 91 years in business, Shenandoah Life has branched out beyond life insurance to offer a range of products, including dental and Medicare supplements. The firm relies largely on agents and brokers to get the products into the hands of both individual and group customers. But the Internet demands that the company be ready to shift its selling model as customers get increasingly comfortable with buying certain products directly through Web sites. To date, the Internet has been a tricky domain for insurers, Clark said. The reason: many people who would not hesitate to book a hotel over the Web are still more comfortable getting insurance policies from a representative over the phone or in person. To read this mixed-market landscape, many of Shenandoah Life’s competitors invest in inhouse research departments to figure out not only what customers want but also how they would like to get it. Shenandoah Life isn’t big enough to support a far-reaching, inhouse research department, but that doesn’t prevent the company from staying on top of important trends. Instead, staffers make the most of the firm’s membership in trade associations such as the American Council of Life Insurers and LIMRA International, a Hartford, Conn.-based association that furnishes financial institutions and insurers with market research. Both organizations provide reports and host conferences that translate into smarter business decisions at Shenandoah Life, according to Clark. “We leverage these organizations, send people to these conferences, and pay for these studies,” Clark said. “That means we have to have a process where we facilitate and discuss what we find, to say, ‘Here’s what’s going on. Here are the demographics.’” From there, he said, strategies get fine-tuned. Investing in technology marks a necessary part of keeping customers satisfied, Clark said. The firm got an early jump on electronic interactivity by developing software systems for Internet applications more than 10 years ago. Today, customers rely on the company’s Web site to keep them up to date about products and procedures. And, Clark expects, buyers are apt in the future to use the site more often to make purchases and manage their accounts. Pressing ahead In the meantime, however, Shenandoah Life is pressing ahead with products that build on its strengths. One important strategy in this mix involves selling more insurance to its existing base of customers. A prime example has come in the form of opportunities for customers in the company’s home state of Virginia to pre-pay their funeral expenses through a program offered by Shenandoah Life. Funeral homes have jumped at the opportunity to present the product as a savings opportunity for those anticipating a need for their services. “It’s going tremendously well for us because of our brand,” Clark said. “Throughout Virginia, Shenandoah Life has an excellent name, and the companies we compete against in this market are located elsewhere in the country.” Competing on the basis of high-quality service requires a motivated workforce. Shenandoah Life keeps morale high, Clark said, in part through a bonus-sharing program. When executives get rewarded for a profitable year, rank-and-file employees literally share the wealth. Beyond that, Shenandoah Life makes sure its values get reflected in real-life practice. Employee diversity is recognized and celebrated at Shenandoah Life, and employees from various departments serve on a diversity committee to provide guidance on diversity initiatives, including employee activities and community involvement. In sum, Shenandoah Life is positioning itself for the future by building on strengths in already established areas from software to brand strength and diverse staffing. It’s an approach grounded in strategic vision—fitting, it seems, for a firm headquartered amid the Blue Ridge Mountains. G. Jeffrey MacDonald is a correspondent for the Christian Science Monitor. Based in Newburyport, Mass., he can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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