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Plan & Protect
Reduce risks and enjoy peace of mind with these tips and insights to protect what matters most.
Market cycles and inflation are facts of business life. Prices of goods and services go up—and hopefully they come down. At The Cincinnati Insurance Companies, we always ask ourselves, “How can we stay focused on our long-term plans in the face of these challenges?” Then, we put thoughtful strategies in place to do just that, for our company, the policyholders and the independent agents we serve.
We know how to weather, and even thrive, during challenging markets because we’ve done it throughout our 75-year history. Consider our actions to stay competitive, stabilize markets and create value for independent agents through the Great Inflation of 1965 to 1982, one of the most difficult macroeconomic periods of our history.
In the 1960s and 1970s, one word kept cropping up in our annual reports: inflation. This was a period in which repair and medical costs soared, eroding our combined ratio. In 1970, the company was losing $10 and $7 for every $100 of premium written on auto and homeowners policies, respectively. As prices continued to rise, independent agents struggled to find coverage for some clients.
So, how did we respond? With education, innovation and choice. We armed independent agents with best practices, encouraging them to properly classify risk for drivers (young ones especially) and to charge the proper rate. One of our founders, Jack Schiff, Sr., went so far as to visit every teenager of an insured when they became eligible for a driver’s license, making sure they understood the risks behind the wheel and their potential impacts on lives and wallets. Other independent agents soon adopted Jack’s cost-conscious, relationship-building strategy. Meanwhile, we pushed out new products, from packaged policies to profitable new coverages, ready to provide agents the technical expertise they needed to produce. These increased opportunities for agents to do business with us boosted their ability to earn commissions. We fought inflation with choice.
“The agents always wanted to do business with Cincinnati Insurance,” remembers retired CEO Robert (Bob) Morgan, looking back at the Great ;Inflation. “We brought a level of professionalism to Cincinnati Insurance when we started writing umbrella policies, and we started a bond department, and we started a boiler and machinery department—we started all of those so that an agent would have more reasons to do business with Cincinnati Insurance.”
Our package policies enabled agents to customize their clients' coverage. Each new line written helped them deepen their relationships with their clients or forge new ones, giving them what they needed to build increasingly profitable books of business. Long terms and optional pay plans created stability and flexibility for both insureds and agents at a time when the world at large was anything but predictable.
Year after year, growth records were broken in volatile operating environments, with sales increasing 20% or more. So, how did we do it?
Higher rates can only account for so much of the growth. Superior products and strong relationships with independent agents who knew how to deftly sell them propelled the rest.
A pattern was starting to emerge, and it would only become clearer as time went on. In the midst of the Global Financial Crisis in 2007, for example, we expanded our business insurance portfolio and launched our excess and surplus lines business, The Cincinnati Specialty Underwriters Insurance Company. A decade later, we acquired MSP Underwriting–now Cincinnati Global Underwriting, giving our agency partners direct access to the Lloyd’s of London market. Through hard markets and tough times, we continue to create new products that deepen relationships with agents and provide paths to growth when they’re needed most.
Inflation peaked and was declared “enemy No. 1” by President Gerald Ford in 1974, as financial pressures mounted across the U.S. Still, we doubled down on our education and advocacy efforts, launching our first Agent’s Schools the same year. Where other insurance companies may have cut back, we ratcheted up to ensure agents had the firepower to drive sales, policyholders had the coverage they needed, and the next generation had the know-how to do business the right way.
The expansion and formalization of our education and training programs followed the formation of our life insurance company a year earlier, giving independent agents yet another opportunity to do business with us and deliver for their clients. By 1982, the end of the Great Inflation and just nine years after its formation, The Life Insurance Company of Cincinnati achieved a billion dollars of policies in force.
Whether it was introducing inflation-guard coverage under our homeowners policy so coverage could keep pace with double-digit inflation in the early 1980s, or providing agents with diverse product lines and teaching them how to sell our products through a growing number of schools and academies, we’re proud of how we offered myriad ways to help agents grow their books and their customers’ protection through the rapid rise of inflation. And we take pride in active listening.
By regularly meeting with independent agents, we’re able to continually gather important feedback on how we can improve. Retired CEO Ken Stecher remembers meeting with agency leaders during the financial crisis and hearing that our personal lines pricing could be more competitive. Rather than cutting prices to build market share and meet near-term goals, we focused on long-term strategies and creating value for our agents. In 2009 we started deploying predictive analytics to increase pricing precision for our homeowner and workers’ compensation lines of business. Then, we implemented the technology in other lines—all in service to what agents asked for: more competitive and precise pricing to boost performance.
Today, interest rates and prices are again stubbornly high. But powered by our proven track record, so are prospects for growth.
“I think so many times when things go bad, a company's reaction to that challenge can be worse than what the difficulty or the challenge was from the get-go,” said CEO Steve Spray. “This company has always been steadfast in thinking long-term. We think not only about the next two years, but about the next 20, as well.”
As The Cincinnati Insurance Companies celebrates 75 years of being A Bridge to Better, we honor our legacy of putting agents first, our noble industry, and our commitment to meeting the ever-evolving needs of policyholders.