Dare To Dream

BELOW: After Al Meyer recommended using J.D. Power & Associates to measure customer satisfaction and set up the program,President Dave Anderson welcomed J.D. Power, company founder, to the 2004 All American convention in Washington, D.C.750,000 surveys went to American Family customers. Agents need of physical repairs. A couple even had dogs or cats in theircould see the results and some were surprised by their scores — office to greet customers.and not always in a good way — but Anderson stuck to his guns.Agents would sometimes complain to Anderson about what The customer feedback had immediate, positive results andGeraci was saying about their customer satisfaction numbers, but agent satisfaction scores rose steadily. High levels of customerAnderson always had the same response: “Nobody at AmFam is satisfaction earned agents the American Star award. Retentionsaying anything about you; your customers are saying it.” And increased nicely, largely from agents adopting proven best prac-he’d usually add, “I know you’re too good an agent to get these tices. At the time, agents had beenscores and I know you’ll work hard to get your scores up.” discouraged from talking with customers who had filed a Agents who received strong ratings qualified for an on-site claim, “because of thevisit from a J.D. Power consultant, who checked out the office fear they might sayand reviewed a variety of customer service standards and practices, something wrong,”particularly personal insurance reviews (PIRs) and responsiveness. Geraci said. TheGeraci recalls the results of the first office visits were surprising. surveys, however,“Few agents had any good system for regularly communicating showed customerswith their customers or tracking communications,” he said. The wanted to talk to theirquality of agent offices ranged from very professional to others in agent during the claim Dare to Dream | 245

WINNERS HAVE MORE FUN!For nearly a half century, if Like most people in the busi- started selling American Family you mentioned the name ness, Tisserand never intended products part-time through Chuck “Joe t” to someone at to work in the insurance indus- Webster’s agency, located in the American Family, they knew you try. Fresh out of college, he company’s home office on the were talking about a company signed up as a police officer city’s east side. He didn’t receive legend — Joe Tisserand. His patrolling the streets of his home- any walk-in or phone business, performance and personality, town, Madison, Wisconsin, for instead prospecting for every both exceptionally strong, made nine years. Thinking long term, policy he wrote. him one of American Family’s he decided, “I want to control my unforgettable characters. own destiny,” and while still a cop, In January, 1970, Tisserand became a full-time agent andBELOW: Just one year after becoming a full-time agent, Joe Tisserand earned the No. 1 agent ranking at the 1971All American convention. He had set a goal of being in the Top 10.246 | Good Times and Challenges

made the most impressive start number, it would be my goal, not increased diversity among agentsin the company’s history. He theirs.” He encouraged agents to and employees. He personallywas the company’s “agent of set weekly and monthly targets, recruited minority candidatesthe month” in February, earn- rather than a single annual goal, throughout his tenure.ing that honor four times in his so they could see if they werefirst seven months. His state making progress. And he freely In the mid-1990s, Tisseranddirector, Jim Johnson, described encouraged competition among moved to lead the Life Company,him as “energetic and resource- agents in his district and sales working tirelessly to build agentful,” which turned out to be an state, preaching the mantra enthusiasm and policy count.understatement. “Winners have more fun!” In 2003, his close friend Jack Salzwedel succeeded him and Tisserand boldly declared he In 1991, Tisserand became Tisserand moved to a new seniorwanted to be among the top 10 regional vice president for the vice president position leadingagents for the 1971 All American then-Wisconsin Region, quickly variable products, again growingagent convention, and would changing the name to Great Lakes products-in-force and contractswrite a million dollars in life insur- Region to make it more inclu- from 2,047 to 13,557 in two years.ance coverage his first year. He sive for his agents in Illinois and As 2004 came to a close, heworked long hours, setting up Indiana. He continued to build retired, leaving a company heat least seven appointments a a reputation for hiring strong loved after a legendary careerday, often working late into the performers and pressing for spanning four decades.evening. He wrote 148 new busi-ness applications in October 1970, BELOW: Joe Tisserand and his wife, Kay, attended hundreds of agent gath-an unheard-of-number at thetime. Few were surprised when erings during his career.he was named the company’s topagent at the 1971 convention andthe next year as well. In 1971, hewrote $2.5 million in life business,the first American Family agent toreach that mark. After Tisserand built a$200,000 premium agency intwo and a half years, Johnsonselected him as district salesmanager for D-10 in Madison,where he brought several newagents on board and continued toset company records. Life volumein the district grew from $7.2million to nearly $23 million in fiveyears. He left the district in 1985to succeed Johnson as WisconsinSouth sales director. With his strong personality,some other managers speculatedhe drove production by unrea-sonably pressuring his agents.Tisserand insisted it was quite theopposite. He would meet one-on-one with agents, asking them toset their sales goals. “If I wereto walk in and set a production Dare to Dream | 247

ABOVE: Alice Nguyen, an American Family agent in Wichita, Kansas was, an early advocate for Personal Insurance Reviews (PIRs).She is shown in 2010 with one of her customers, Israel Portal. process, so agents were encouraged FUTURE CEO MOVES TO RUN ANOTHER PRODUCT LINE to contact them. Early in 2003, Anderson asked Salzwedel to assume leadership The surveys showed other of the Life Company, succeeding one of Salzwedel’s mentors, Joe Tisserand, who moved to a new variable products senior potential areas for improvement, vice president position. Anderson had identified Salzwedel and Marketing Vice President Al Meyer as potential candidates to too. Traditionally, agents had rarely succeed him as president. He wanted to rotate Salzwedel, Meyer and other officers into different positions to allow them more told customers about a rate change varied experience, just as Anderson himself had done. Executive Vice President Darnell Moore selected underwriting veteran Joe in advance, sometimes in the hope Zwettler to succeed Salzwedel in personal lines, citing both his experience with the product lines and his role in developing the the customer wouldn’t notice. insurance-to-value initiative and other underwriting strategies. However, the research said custom- Like his predecessors, Salzwedel had his hands full with the life company during his brief tenure there. At the time, only 13Sam Geraci ers wanted to hear about premium changes from their agents. Salesmanagement began to stress the importance of personal insur-ance reviews with every customer. Agents began focusing oncustomer contact and best practices, and consistently achievedhigher satisfaction than exclusive agents with other companies.Geraci would eventually be named vice president of strategy forAmerican Family.248 | Good Times and Challenges

percent of American Family house- asset level to reach a million and two weeks to add our last million. We wanted to reach a point where we were adding a million a day.”holds had a life policy and new Tisserand and DeSalvo believed the product had hugebusiness applications were down. potential and began requiring all new agents to go through the rigorous licensing process, which required that they pass lengthy,It was a perennial problem: Many difficult and complex examinations. Many veteran agents were reluctant to sell variable products, primarily because they viewedagents simply weren’t selling life them as much more complicated and time-consuming than other products. When Tisserand retired less than two years later, assetsproducts, telling their managers under management had increased to more than $59 million.they didn’t have time. But just as companies strive to introduce and grow new product lines such as variable products, they also must end thoseSalzwedel readily acknowl- that no longer are viable. American Family leaders decided to stop selling long-term-care insurance because it wasn’t achiev-edged that many life products were ing the necessary volume to offset overhead costs. It was the right decision. Throughout the 1990s into the 21st century, dozens ofoutdated, mainly because I/S tech- Joe Zwettler insurers sold long-term-care policies, viewing the new product as a growth engine meeting the needs of retiring Baby Boomers. Butnology hours weren’t available, but with health care costs rising rapidly, most actuaries badly under- estimated costs and it became clear long-term-care productshis team did manage to develop and introduce a dozen new or lacked financial sustainability; industry-wide sales collapsed.updated life products by January, 2005, shortly after he left thedivision. During his time at the life company, Salzwedel, likethose who held the post before him, was frustrated that Life’slower priority for technology dollars prevented the companyfrom updating its product pricing and features more often.Meanwhile, Salzwedel’s predecessor in the Life company, JoeTisserand, was determined to make variable products a successstory. By mid-2003, there were nearly $15 million in assets undermanagement. Tisserand said, “It took us three months for theEXPERIENCE TO GROW transferred from accounting director in the controller’s divisionThroughout his career, to the life company as planning no matter his position, and risk management director Jack Salzwedel recog- and later as life product designnized talent and helped advance director. He worked in life forthe careers of high performers. three years before returning toDan Kelly is a good example. In the controller division as financial2003, Kelly was an up-and-com- analysis director.ing controller division directorwho decided to move to the life In 2007, Salzwedel, then presi-company to get some line expe- dent, would promote Kelly to vicerience and work for Salzwedel, president of human resources andwhom he admired. later chief financial officer. To make the move, Kelly Dare to Dream | 249



Instead of only saying yes or no to business, we want to evaluate each risk and price it accordingly. We want to become a risk-pricing company. — DAVE ANDERSON, CEO, American Family Insurance12 PAIN AND PROGRESS

CHAPTER 12 | PAIN AND PROGRESSIn 2004, American Family’s phenomenal growth slowed dramatically. At a conten- tious officers’ meeting in the dog days of August, CEO Harvey Pierce declared that policy growth, at less than 2 percent, “should be unacceptable to every employeeand agent in the organization.” In his characteristically blunt “He was really down,” Fetherston recalled. “I didn’t know ifstyle, President Dave Anderson aggressively challenged Dan he was thinking about quitting or just needed somebody to listen,DeSalvo and his sales vice presidents to be more creative in their but I assured him he had strong officer support and was preciselyefforts to boost sales. the right person to lead the company.” Anderson listened but was uncharacteristically silent. Fetherston quietly left the office and DeSalvo took offense. Following the explosive growth in the two men never discussed the subject again.2002 and 2003, he felt his sales team had been unfairly criticizedin front of their peers. He went to Pierce and demanded that This was a low point in Anderson’s career, but probablyAnderson apologize to the sales executives — privately and then inevitable. He had pushed hard to encourage his executive viceagain before the entire officer team. presidents to focus less on protecting their turf and more on broadly understanding the industry and the company’s customers Anderson was aware that his straight-forward manner to make better long term decisions. Because of his background, heoccasionally offended some members of the executive team. He had emphasized financial analysis and discipline, as well as stra-didn’t mince words. And in this instance, he believed an apology tegic planning. Anderson, Dan Schultz and others were askingwas both unnecessary and embarrassing. But he was reluctant some tough questions: Why should the company accept a profitto refuse Pierce’s demand that he apologize, and he knew the and growth plan where commercial lines would lose money indef-support of the sales team was critical for the company’s success. initely with no plans to change it? How could we drive the lifeHe apologized — twice. company to achieve its return-on-equity targets? Schultz recalled Anderson “working hard to drive the financial side but facing Following the officers’ meeting, Anderson called Public continual frustration at getting commitments and results fromRelations Vice President Rick Fetherston to his office. Standing the sales side.” Anderson knew some of his subordinates, two ofnext to his desk, his head down in a reflective pose, in a soft voiceAnderson said, “I don’t know if I want to do this anymore.”252 | Pain and Progress

whom competed with him for his job, were critical of his leader- segments — married couples with children, married couplesship, but he overlooked it, trying to develop a collegial working without children, single parents, independent singles, youngrelationship with his team. adults, college students, pre-retirement singles or married couples and retirees.The division developed targeted marketing strategies For his part, Pierce realized the tension among top company aimed at each group, and Personal Lines and the Life Companyexecutives had to be addressed. He set up a few informal get-to- developed an Auto-Life discount for those with policies in bothgethers to discuss the problem. The first one was hosted by Brent lines and increased the Home & Auto discount from 5 to 10Johnson, who was never known to say a bad word about anyone. percent. The moves helped attract and retain customers, withThe executive vice presidents sat around his dining room table, policies-in-force increasing by 150,000 at year-end.with Pierce asking them to describe “how you approach deal-ing with someone with whom you have an issue?” Over a few ‘THE KEY TO OUR FUTURE’weeks, the gatherings seemed to help and the leadership teamgradually developed a better working relationship. About a year The pressure in August 2004 wasn’t just on sales and market-after the apology incident, DeSalvo told a fellow officer, “I never ing. Personal Lines Vice President Joe Zwettler announced thethought I’d say this about Dave Anderson, but I think the guy company would develop a new Risk Pricing Model (RPM), anknows what he’s doing!” improved rating and pricing model for auto and homeowners. It was essential, he said, because “it will have a positive impact on In the end, the sales team responded to Anderson’s demand growth and profitability as the company more accurately pricesfor programs to spark new business. Marketing focused on risks.” Company President Dave Anderson said, “Instead of onlycustomer segmentation to develop targeted marketing strategies.The division’s strategic research department pulled demographicdata from 150,000 customers to create nine distinct customerBELOW: President Dave Anderson and CEO Harvey Pierce worked together effectively, despite significant differences in personalityand background. Pierce delegated complete authority to Anderson to manage the company on a day-to-day basis. Dare to Dream | 253

AMERICAN FAMILY CHILDREN’S HOSPITALW hen Harvey Pierce the company’s board of direc- The 72-bed American Family was the compa- tors: donate $10 million to start Children’s Hospital (AFCH) ny’s CEO, someone the hospital fundraising drive. opened its doors in 2007 onasked him if his job was the most They knew it wasn’t a sure thing the University of Wisconsinimportant part of his life and he because the company had never campus in Madison, affiliatedimmediately responded, “I sure even considered a single char- with UW Hospital and the Schoolhope not!” itable contribution anywhere of Medicine and Public Health. near that amount before, but Within five years, its physicians, Pierce’s primary passion was the board voted unanimously nurses and staff treated sick chil-always his family. As such, it was to proceed. American Family dren from 49 states, admittingno surprise to those who knew employees and agents quickly 3,500 youngsters annually. AFCHhim that he would play a lead got on board, and their individ- quickly suffered growing painsrole in building the American ual donations and fundraisers, from tremendous demand, soFamily Children’s Hospital — one often matched by the company, in 2012, the company pledgedof the nation’s top-ranked pedi- increased American Family’s early $2 million toward the “Sick Kidsatric medical facilities. Pierce support to $15 million. Efforts Can’t Wait” campaign’s goalthought the primary purposes of ranged from silent auctions to of $46 million. The money wasthe hospital and American Family bake sales to Pierce’s grandkids’ earmarked to add 15 more beds,aligned perfectly: helping people sidewalk lemonade stand. equipment and technology,mend after one of life’s inevitable including a pediatric and surgicalchallenges. Ultimately, 13,000 donors from neonatal intensive care unit. Once many states contributed $43 again, employees and agents In 2004, Pierce and President million, supplementing $37 million came through, donating nearlyDave Anderson asked Public in state funding to build the $80 $750,000 in just a few months.Relations Vice President Rick million state-of-the-art facility.Fetherston to make a pitch to254 | Pain and Progress

Bill Westrate Mary Theilen Mary Schmoeger Julie Rupert Dave Holmansaying yes or no to business, we want to evaluate each risk and credit history as a factor in determining a customer’s rating, weprice it accordingly. We want to be a risk-pricing company.” He could become an attractive company for those with poor credit.”wasn’t exaggerating when he told agents and employees that the Some agents immediately objected, saying rates would go up.new model “is the key to our future.” “Not necessarily,” Zwettler responded. “For some customers, ratesRPM was controversial from the start. It meant the company may increase but for others, rates will decrease. It depends onwould reverse course and incorporate credit into the rating how accurately or inaccurately those customers are priced now.”process. Mary Schmoeger, personal lines director, told agents, Several future executives played important roles in the“Our competitors are using credit and there is a strong perception game-changing project. Bill Westrate was risk-pricing direc-that we are subject to adverse risk selection. If it’s apparent that tor, responsible for developing and implementing a risk-pricingAmerican Family is one of only a few companies not utilizing system. When Westrate was named vice president of the actuarial division, Mary Theilen, another actuary, succeeded him. She, too, later became an officer in chargeBELOW: When the company introduced the Risk Pricing Model (RPM) initiative, sales of reserving and enterprise risk management. Both had beenleaders worked hard to explain to agents how it would work. hired by Brad Gleason, actuarial vice president, as part of his drive to attract fresh talent to upgrade his division’s pricing capabilities. Schmoeger, a future executive vice president and personal lines leader, was responsible for devel- oping the necessary processes around operating the new pric- ing plan. Some other key players included Julie Rupert, who even- tually became vice president of personal lines, as well as Julie Peetz, John Broadrick and Dale Riemer. Dave Holman, who would eventually become chief strategy officer for the enterprise, was the legal division’s attorney assigned to the project. Dare to Dream | 255

ABOVE: Company leaders opened the new Mountain Region office in Denver in a 2004 snowstorm. Pictured (from left) are DanDeSalvo, sales EVP; Dick Haas, office administration vice president; President Dave Anderson; Terese Taarud, claims vice pres-ident; Don Alfermann, regional sales vice president; Darnell Moore, administration EVP; and LeeAnn Glover, real estate andplanning director.MANAGING CUSTOMER INFORMATION BELOW: In 2004, American Family claim adjusters evalu-By 2004, the old ghost of technology troubles was causing prob- ated more than 439,000 vehicles involved in accidents andlems inside the business. Providing agents and employees with 132,000 homes that sustained damage. Claims Examinerconsistent customer information was a challenge. With customer Zach Murray was on the front lines.data stored in multiple systems across different business lines, itwas difficult to get a complete, accurate view of individual poli-cyholders and households. Even simply updating a customer’saddress involved many time-consuming, repetitive steps. In response to these issues, American Family launched theCustomer Information Management (CIM) corporate initia-tive to integrate all business lines systems containing customerinformation, as well as the claims and billing systems. DeannaMueller and Carol Yttri were the project managers, assisted byothers including Bill Simon, Greg Polster, Rene Leffler andTina Baker. Mueller recalled how difficult the process was: “Thecustomer information was scattered across siloed systems; therewas no way for us to know if a person in one system was thesame person in another. Data quality was poor.” The ambitiousproject to consolidate data would take more than five yearsto complete.256 | Pain and Progress

DAVID R. ANDERSONKEEPING AN EYE ON THE BIG PICTURE…AND THE DETAILSDave Anderson always tried to President 1999 - 2006 you met with him, you needed to be keep things in perspective. On Chairman and CEO 2007 - 2011 prepared for both!” Nov. 17, 1998, he couldn’t wait to get home and tell his family he had American Family in 1975, working in the Throughout most of his career, been elected president of American controller division directing the budget- Anderson’s temper was legendary. He Family Insurance. “But when I got ing, financial planning and accounting didn’t suffer fools gladly, as they say, and home, my news was second best,” he functions at various times, and he was often blunt if not blistering if some- recalled, “because it wasn’t the most carried his belief in personal account- one performed poorly in his estimation. important thing that happened in our ability into all of those arenas. “If I’m not But after he became a company officer family that day.” The news that trumped a success or if I’m running into obsta- in 1996, heading the Information Services Anderson’s was that his 17-year old son, cles, I look to myself. I don’t look to division, he began to more carefully Matthew, captain of his high school blame others,” he said. “I’ve either set measure his words. By 1999, when he swim team, had pulled another boy off the wrong goals or I’m looking at it the began his tenure as president, Anderson the bottom of the pool that day, saving wrong way. It’s no one else’s fault if I’m reflected, “Some people won’t believe his life. “It reminded me,” Anderson not successful.” this, but I’ve developed more patience. said, “that the most important things in I’m much more aware of what I say.” life are not titles or professional accom- Dan Kelly, the company’s chief finan- plishments, but instead, the kind of cial officer, once reported to Anderson. Anderson said he was often amazed person you are inside.” He believed “one of Dave’s greatest at how people responded instantly Anderson grew up in Plymouth, strengths was his keen ability to always to small comments he’d make. “I’d Wisconsin, a town of about 6,000 see the big picture while also being able worked here 24 years before becom- people in the east central part of the to focus on the details that matter; when ing president and suddenly, people were state. His father was a community leader, listening to me!” serving as mayor and city attorney. Because his dad was involved in so many Throughout Anderson’s career, he leadership roles, “It was a natural thing spent most of his free time on family for my brothers and me to do the same,” activities. With five children, there was Anderson said. rarely a day without a sporting event As an executive at American Family, or ballet or theater practice. He and his he actively focused on United Way and a wife, Mary, set up family gatherings every local food bank, where he and his family Sunday so family members could catch would spend time breaking 500-pound up on one another’s activities. He also bags of rice into smaller portions. did the cooking most of the time, “mainly Anderson constantly encouraged people so I could pick the wine.” He continued to remember their roots, remember- to maintain strong connections with his ing his first job canning peas in a factory children, particularly after Mary’s death and later as a company clerk and supply from cancer soon after he retired. sergeant in the U.S. Army. After earning a bachelor’s degree Anderson will be remembered for in finance and marketing and an initiating the focus on customer satis- MBA in finance from the University of faction and accenting profitability and Wisconsin-Madison, Anderson joined financial strength during his tenure. When asked how he wanted his retirement announced, he said it should consist of just 10 words: “Thank you for the oppor- tunity to lead this great company.” Dare to Dream | 257

A NEW EMPHASIS ON “SHOULD WE GET INTOSATISFYING CUSTOMERS THE BANKING BUSINESS?”In 2005, Dave Anderson again urged agents and employees to In 2005, as he considered other ways to raise customer satisfac-focus on increased customer satisfaction. “We want our custom-ers to be the most satisfied in the industry,” he said, “because that tion and grow the company, Anderson wondered if Americanwill translate into policy renewals, which is our customers’ way ofletting us know we delivered the value they expected.” Family should establish a bank. While American Family With internet use growing rapidly, the company realized Financial Services (AFFS) offered small loans, Anderson knewcustomers wanted still more online options. Work began on aplan to allow them to view policies online, apply for vehicle insur- State Farm had set up its own bank in 1998 and Nationwideance and get quotes on a wider range of products. (Progress camegradually on that initiative, and it would actually be five more was considering it. He met with R.D. Boschulte, AFFS viceyears before a customer could complete a purchase online.) president, and told him, “I want toBELOW: Claim Call Center representative Shari Purcell worked buy a bank.”the 8 p.m. to 2 a.m. shift in 2004. The centers’ 177 employeeshandled 790,000 calls that year. “People say ‘Oh my good- Boschulte pushed back. He’dness, I got a real person!” Purcell said, adding, “they expectto get something automated, but I tell them we’re open 24 had a successful career in bank-hours a day, seven days a week.” ing prior to joining American Family and had concerns about bank underwriting standards. “He insisted we didn’t want a bank because the entire credit market was unhealthy,” Anderson said. After listening to Boschulte’s R.D. Boschulte reasoning, Anderson dropped the idea. (After the 2008 financial collapse, driven largely by unsound lending parameters, Anderson said he was very grateful he had been talked out of the banking business.) The intense work on all the various initiatives and internal process changes yielded results: The company ended 2005 with a $620 million addition to equity and a $214 million increase in BELOW: Executive Vice President Dan DeSalvo played a key role in sales and marketing during his career. He died unexpect- edly in 2005 at age 57.258 | Pain and Progress

GROUNDBREAKING IN ST. JOSEPH President Dave Anderson led the ceremony manning a huge digger. At the ribbon-cutting ceremony dedi-More than 850 employees cheered the ground- cating the addition several months later, CEO Harvey breaking for a $12 million addition to the Pierce visited with an employee from his hometown, regional office in St. Joseph, Missouri, on Willmar, Minnesota. July 21, 2005. The four-story addition added 100,000 square feet to the facility, tripling its size. Companyrevenue. Net income was $671 million, up 19 percent. The insur- Al Meyer. Anderson had promoted both men to executive viceance operation marked its best year from a profit standpoint in president positions and considered each a potential successor.its history. And yet, there was a warning sign that signaled allmight not be well: Policy growth was only 53,000. The year also This was Meyer’s second shot at the job, after being inter-ended on a sad note with the death of 57-year old Dan DeSalvo, viewed for the position in 1998 when Anderson was selected.who died of a sudden heart attack in Arizona on December 30. Meyer had a solid record as marketing vice president andTHE RIGHT LEADER FOR THE TIMES administration executive vice president. During his tenure, he had driven several key advancements, including telemarketing,Early in 2006, Harvey Pierce announced that he would retire online customer interaction, strategic research and the J.D. Powerat the end of the year. With Dave Anderson slated to become customer satisfaction program. He was viewed by many as anCEO, speculation immediately turned to who would be named advocate for a steady, consistent, stay-the-course approach.the next president. The front-runners were Jack Salzwedel and Salzwedel, however, decided to be forthright, if not aggres- sive, in outlining a new direction for American Family. He’d taken to heart Anderson’s call for the executive team to thor- oughly understand the industry, the direction it was headed, the Dare to Dream | 259

ABOVE: CEO Dave Anderson and President Jack Salzwedel had a warm professional relationship as they led the company. Salzwedelappreciated Anderson’s emphasis on customer satisfaction and his successful efforts to help all agents and employees under-stand the company’s main goals. Anderson viewed Salzwedel as innovative and the right person to lead the company in a rapidlychanging marketplace.challenges, the opportunities and American Family’s positioning. chief financial officer at the same time, replacing the retiring Salzwedel predicted the industry was heading into very chal- Brent Johnson.lenging times. He proposed strengthening the agent distributionsystem while simultaneously addressing the growing threat of Salzwedel wasted little time. In his first message to the orga-digital competitors, endorsing Anderson’s goal of becoming No.1 in customer satisfaction. nization, he directed the strategic planning team to develop a “I had decided,” Salzwedel said, “that if the board didn’t want new customer-centered visionto go there, I didn’t want it.” for the company, replacing Board member Tom Zimbrick, who participated in theinterviews with board member Walter Oliver and Anderson, “Strong, Growing and Friendly,”said Salzwedel ultimately got the job because he understoodthe company faced significant change. “He wasn’t specific,” said which had guided the organiza-Zimbrick, “but he made it clear we couldn’t go on doing busi-ness as usual.” tion for three decades. Noting Anderson felt a sense of urgency and convinced the board the company’s extraordinaryto immediately name Salzwedel chief operating officer onAugust 1, while Anderson retained the president’s title until he growth in recent years, he urgedbecame CEO at the start of the New Year. Another future pres-ident, Controller Vice President Dan Schultz, was promoted to agents and employees to guard against cultural complacency, “a feeling that just because we’ve been fine in the past we’ll be fine Dan Schultz in the future.” And with a quar- ter of American Family’s agents 55 or older, Salzwedel said the organization needed stronger talent management and succession planning, not just for senior leaders, but throughout the company.260 | Pain and Progress

ABOVE: When Jack Salzwedel left Personal Lines to become vice president of the Life Company, EVP Darnell Moore (left)selected veteran underwriter Joe Zwettler (right) to succeed Salzwedel. Zwettler understood the need to quickly become arisk-pricing company, recognizing American Family was behind some other competitors who had created more sophisticatedpricing systems.RPM ARRIVES reduction. Of course, unless everyone was paying the exact same rate, very few customers — with American Family or any insur-Anderson and Salzwedel’s first major challenge arrived quickly ance company — would get the absolute “lowest rate.” with the pilot launch of the Risk Pricing Model (RPM) in2006 in Colorado, Illinois, Indiana and Iowa. The model used The public relations division did its best to write lettershundreds of risk factors to determine the likelihood of individ- that clearly explained the situation but state regulators requiredual policyholders experiencing future claims to set the premium all insurers to use specific wording for the harsh, bottom-linethey would be charged. message. Understandably, many American Family customers were angry after receiving the notification. Sales managers urged For the first time, the company was using credit as a rating agents to contact customers to explain what the letter meant andfactor. Once the company ordered policyholder credit infor- discuss options.mation and calculated property premiums, agents were giveneight days’ notice of a change in the renewal premium, which Many agents faced difficult, emotional conversations withwas related to credit as well as other changing rate factors. They longtime customers who were leaving because of premiumwere urged to immediately contact their customers to discuss the increases, some of whom had never missed a premium paymentprice change — up or down — before their customers received or filed a serious claim. Some agents contacted Salzwedel or“the letter.” Marketing Vice President Gerry Benusa directly to sadly describe the loss of a longtime, loyal customer, asking them Under the Federal Fair Credit Reporting Act, insurance to intervene or somehow alter RPM. Salzwedel was genuinelycompanies were required to send customers a letter stating moved by some of these calls, but he also knew RPM had tothey were not getting the company’s absolute “lowest rate.” The proceed. “We knew there would be pain associated with RPM,letter was required even when customers were receiving a rate Dare to Dream | 261

BUILDING TALENT TO SUCCEED but we had to do it to stay competitive,” he said. And as Benusa recalled, “Much of the agentTalent Management programs started in 2000 resistance to RPM was because they didn’t real- at American Family with leadership assess- ize most of their customers were misplaced in ment and development programs. In 2007, the our pricing system.”Strategic Planning Team established a formal initia- To quiet the tumult, Salzwedel, Zwettler,tive to identify, assess and develop employees and Benusa and Actuarial Vice President Brad Gleason and others, took their message directlyagents to broaden the pool of future potential lead- to agents in the field. In town hall sessions, the leaders explained why RPM was necessaryers. CEO Jack Salzwedel told employees and agents, and listened to the heartfelt, sometimes angry responses from individual agents. Zwettler was“One of our future leaders could be you or the next particularly blunt in making the case: “American Family offers our Advantage plan to our bestperson to walk through our door.” customers, and you might think those customers who get our best rates are less likely to leave us.Recognizing the critical link among culture, Not so. Some of our competitors are able to look at the group that qualifies for our Advantageemployee experience and being customer driven, rates and, using a more sophisticated rating plan,the company created a Talent Development divisionin 2016. In an increasingly digital era, education andtraining began moving away from learning in class-rooms or meetings to more personalized, experien-tial learning.Led by VicePresident Jan Kittoe,the Talent Developmentteam used data todevelop impactful, role-based training andincreasing the use ofdigital and on-demandlearning. “How thenext generation learnsis very different fromhow I learned,” Kittoesaid. “We’re building Jan Kittoea talent developmentstrategy for the future, recognizing the work placeisn’t always a static, 9-to-5, physical experience.Technology has created flexibility, and our approachto learning is responding to these changes.”A continuing focus on leadership developmentacknowledged the critical role of leaders in theemployee experience. That meant looking at build-ing skill sets around behaviors, like agility and prob-lem solving, as much as technical skills. “Businessstrategies have changed, and successful leadersneed a combination of emotional intelligence as wellas technical strengths,” said Kittoe.Part of the talent development focus included anincrease in talent rotations, giving leaders oppor-tunities for increased learning in different businessfunctions. “The best leaders have strong techni-cal skills, business acumen and leadership skills,”said Jim St. Vincent, chief human resources officer.“Giving leaders exposure to new areas of the busi-ness helps them develop all three.”262 | Pain and Progress

offer better rates to some of our best customers. They’re starting countered their complaints by reminding agents they were beingto eat our lunch!” handed new customers who were great prospects for additional lines of insurance. Still, some agents were concerned about their Benusa echoed the message, telling agents that “many, if not long-term future if the call center model took off.most, of your customers are misplaced in our pricing, and RPMis designed to provide fair and accurate rates for them.” Gleason WELCOME Bob Toneyconcurred, telling agents that RPM would offer their lowest- TO WASHINGTON!risk customers a more competitive price, helping their agenciesand the company grow profitably. Against this backdrop of pain- In the midst of a sweltering heatful change, agents were also feeling anxious for another reason. wave that blanketed most of theThey knew the company was continuing to tiptoe into online and Northwest, American Familycall center insurance sales. Prospects could already visit amfam. entered the State of Washingtoncom and receive instant, provisional quotes, but a pilot program on July 1, 2006, four yearsin Iowa and Nevada took this a step further. Customers who after its last geographic expan-provided additional information in the online application imme- sion into Utah and Idaho. Thediately received calls from licensed employee representatives in move to Washington was origi-a customer care center, who could collect payment and bind the nally seen as another example ofpolicy.These new customers were immediately assigned to agents diversifying catastrophe exposurein their areas, but the agents received reduced compensation forfirst renewals. Some agents weren’t happy about it. Zwettler Dare to Dream | 263

ABOVE: Company leaders opened Washington State in 2006, including away from Midwest storms, but this was before scientists began raising credible concerns aboutCEO Harvey Pierce, EVP Darnell Moore, State Director Bob Toney, Mar- potential earthquake/tsunami events in the north-keting Vice President Gerry Benusa and President Jack Salzwedel. western part of the United States. Like other state entries, the company initially focused on key metropolitan areas, starting with the Seattle area and its 4 million residents. Sales Directors Bob Toney and Rob Quesnel recruited 22 agents, because Quesnel, as the Oregon sales director, was also responsible for some south- ern Washington counties. T.J. Smith of Puyallup, Washington, was the first agent to open an office in the new sales state in October, and a decade later, he continued to build his agency. Toney began a long, successful run in Washington, marked by his perpetually sky-high level of enthusiasm and optimism. Sales boomedBELOW: Eleven years after entering the State of Washington, several agents who joined the company early on gathered for a photoat the 2017 state spring awards meeting. They included (from left) TJ Smith, Ryan Carlson, Dan Farrell, Becky Willey, Dan True,Julia Meek, Elaine Tran, Mandon Foley and Bob Toney, state sales director.264 | Pain and Progress

right off the bat, with Toney insisting agents have a good mix of (though she later was selectedbusiness in their agencies, with an emphasis on retention. The vice president of office admin-entry plan called for 46,000 policies by 2008 and the sales team istration by her former boss,blew by that prediction, earning 72,500 policies. Agent count Al Meyer, executive vicegrew quickly to 108 agents by the end of 2008. president.) By 2016, after 10 years with Toney at the helm, agent Knapstein’s success-numbers were stable and Washington’s policies-in-force were ful television advertisingover 289,000. Profitability problems persisted, however, due to program had been pulledintense rate competition in the state. back while a new in-house team developed a differ-RESHUFFLING ent approach. That newAN EXECUTIVE TEAM campaign, featuring themes from old televi-Throughout the second half of 2006, Salzwedel and Anderson sion shows such as “Thecontinued to solidify their officer-level management team. Munsters” or “GreenSalzwedel decided his former rival for the president’s job, Al Acres,” drew extensiveMeyer, should succeed him as sales executive vice president. criticism. Benusa pulled the new ads and American Family actu-Brad Gleason was promoted to administration executive vice ally “went dark” on television airwaves for several months.president, succeeded by Bill Westrate as actuarial vice presi-dent. Mark Afable became claims vice president late in the year, Benusa remembered his first meeting with his new market-succeeding Terese Taarud, who left the company ing director team, where they reviewed more than 200 projects underway, 80 percent of which were classified high-priority. For his part, Gerry Benusa assumed leadership of a belea- When Benusa asked them how often they got together to reviewguered marketing division. His predecessor, who had left the and prioritize projects, one of his new directors, Steve Tjugum,company, had completely restructured the division, displacing some responded, “Counting today…once!” Benusa and his team quicklylong-tenured employees. Veteran Advertising Director Annette developed a process to prioritize and reduce the number of proj-Knapstein was one person who had lost her job in the shake-up ects and spending, eventually restoring a sense of stability to the division’s employees.BELOW: Gerry Benusa took over leadership of the marketing REINVENTING CLAIMSdivision late in 2006 and spent much of his time explain- A Reinventing Claims strategic initiative ramped up, aimeding the Risk Pricing Model initiative, whether one-on-one, in at improving the speed and efficiency of claim handling togroup meetings or at large agent gatherings. increase customer satisfaction. The careful study focused on processes, people, systems, structure and culture, resulting in some claim office consolidations in the second half of 2006. Offices in Vernon Hills, Illinois; Rockford, Illinois; Arden Hills, Minnesota; Sioux Falls, South Dakota; and St. Joseph, Missouri were closed. Some 26 office locations across the company’s oper- ating territory would handle customer claims. The company increased the number of field adjusters equipped with mobile office capabilities to handle in-person inspections. The first of four Claim Customer Care Centers (CCCCs) opened in Denver late in the year. The division’s new vice pres- ident, Mark Afable, told agents, “The care center is designed to take care of customers by answering as many questions as possi- ble, sometimes even settling the claim, during the first phone call.” Dare to Dream | 265

ABOVE: Claims Vice President Mark Afable told emp- ABOVE: On May 15, 2006, American Family Securities, LLC marked itsloyees and agents it was essential to improve the fifth anniversary selling variable products. Shown (from left) wereclaims customer experience to increase satisfaction. Paulette Siebers, broker-dealer vice president, Tom Anfenson, sales support director and Ann Wenzel, compliance director.BOOTING OUTDATED deliver something tangible in a short period of time to justifyTECHNOLOGY OUT THE DOOR the expense of the project.”They decided to produce a new Sales Initiation Suite (SIS) for agents, providing technology thatLate in 2006, the strategic planning team agreed to fund an would help them better serve their customers.The new CustomerInfrastructure Lifecycle Program (ILP) to begin upgrading the Information Management (CIM) system would be integratedcompany’s hardware and software resources, many of which into SIS so agents would eventually have a single access pointwere at the end of their useful lives. The entire technology infra- for all sales and service activities.structure had been designed when the company’s focus was onproducts. But now, with an increased emphasis on pricing and At the time, some people grumbled that the Lifecyclecustomer service, technology had to also focus on helping agents Program should have focused on a more important priority —and employees serve policyholders. “the engine” — of the company’s outdated policy processing systems, which was preventing RPM from further development. In addition, the RPM initiative could not become more Unfortunately, once again that was easier said than done. Assophisticated without new technology. Given the limitations of Zwettler later recalled, a new “engine” would have had to includethe company’s aging processing systems, at that point RPM still new products and pricing, a risky, complex and very costly propo-needed significant manual labor to accommodate the new rating sition. Leaders weren’t ready to head down that path yet.system. Personal lines processors were spending thousands ofhours re-keying information into the system as a workaround As American Family pressed forward with RPM and ILP,for the problem. the company recorded a $202 million loss from operations in 2006 — just a year after posting a record $889 million gain. I/S Vice President Byrne Chapman’s approach to the American Family had reduced premiums in late 2005 and earlychallenge was to examine the company’s business processes 2006, draining $300 million from revenues, but record storm andwhile predicting future needs before he began upgrading core catastrophe losses of $1.1 billion had the biggest impact on 2006infrastructure technologies and computing architectures. The financial results.strategic planning team budgeted $60 million late in theyear and said funding would be determined annually. Theresa “The bottom line isn’t the only way to assess the kind of yearBreunig-Silbernagel and Terry Siefert were I/S director leads we had in 2006,” said Dave Anderson. “Another approach is toand Breunig-Silbernagel said the team felt they were “asked to consider how much our customers relied on us, and in that sense, American Family had a highly successful year.”266 | Pain and Progress

NAME THAT SONG As company president, Dave Anderson showed his sense of humor to build camaraderie among his leadership team members. Once, he asked each officer to select their favorite song, then created a CD with all the songs featuring a rock n’ roll version of Dave on the cover. After asking his team to guess which song went with which officer, he gave each one a copy with an iPod.ABOVE: American Family catastrophe teams were busy in 2006 with multiple storms causing more than a billion dollars in claims. Dare to Dream | 267



People are not your most important asset. The right people are. — JIM COLLINS, author, Good to Great13 A NEW ERA — WITH TOUGH TIMES AHEAD

CHAPTER 13 | A NEW ERA — WITH TOUGH TIMES AHEADA new era for American Family dawned on New Year’s Day 2007 as Dave Anderson and Jack Salzwedel formally assumed their top leadership roles. Bright with optimism, they acknowledged both privately and publicly that there were somechallenging times ahead. What they didn’t know was that those Schmoeger and Commercial-Farm/Ranch Vice President Jerryexceptionally tough times would last five years. Rekowski to executive vice president roles. They and their peers on the senior leadership team crafted a new mission and vision Anderson and Salzwedel quickly rounded out their senior statement to emphatically proclaim customer satisfaction asexecutive team, promoting Education Vice President MaryBELOW: When CEO Dave Anderson and President Jack Salzwedel moved into their new roles, they didn’t know they would facefive years of tough economic times.270 | A New Era — With Tough Times Ahead

American Family’s top priority.The new mission: To be the most trusted and valued service-driven insur- ance company. The new vision: To maximize customer value through industry-leading service, exceptional claims experiences and products that build long-term relationships.Mary Schmoeger Salzwedel preached the new direction at town halls in nearly every state.“The data doesn’t lie,”he told employees and agents over and over again. “Higher profit, growth and retention are strongly linked to higher customer satisfaction.” The company was already earning high marks in the annual J.D. Power national auto insurance survey: No. 1 for agents offeringJerry Rekowski personal insurance reviews (PIRs), No. 1 for frequency of customer contact; No. 2 in timeliness forclaims handling, and No. 3 for discussing coverage options withcustomers facing a price increase. Overall, the company was rated5th for both auto and homeowners.The senior leadership team quickly followed thenew mission and vision with four strategic goals:1) maximize customer value, 2) optimize growth,3) maintain financial strength, and 4) build onour people advantage.To encourage agents and employees toget on board with the new direction, thepopular Corporate Incentive Program(CIP) for employees and a revisedcompensation plan for agents rewardednot only production, but customer satis-faction, retention and profit. Everyonenow had skin in the game.COMMITTED TOAGENTS BUT OFFERINGCUSTOMERS MORE OPTIONSDuring this time, Anderson and Salzwedelremained fully committed to agency as a distributionsystem, but also recognized change was inevitable. They Dare to Dream | 271

ABOVE: Each spring, eligible employees received a Corporate Incentive Program realized they were playing catch-up with RPM as other companies like Progressive(CIP) check, based on the previous year’s financial and customer satisfaction/ and GEICO tried to commoditize autoretention results. Many managers gathered employees to celebrate the day. insurance. Salzwedel told employees andLori Krumberger, enterprise risk management director, let a dart fly during her agents, “We have to make sure we hedgearea’s gathering. CIP helped employees understand how their day-to-day work our bets so we are prepared to go in differ-impacts the company’s mission, vision, objectives and results. ent directions, depending on what happens in the industry marketplace and how customers react to that.” Anderson also stressed the critical importance of agents long term. “We’re blessed to have a great agency system already, which is the most expensive and difficult part to put together,” he told the organiza- tion. “We need to develop additional — not alternate — ways to provide products.” An online application for insurance, he said, is a “completely different product than a policy sold and serviced by one of our great agents.” Salzwedel agreed and said, “We’ve got ourCORRESPONDING WITH CUSTOMERSAfter some custom- to $18 million despite significant ers complained about increases in postal rates. receiving too muchmail from American Family, the DPR Director Larry McNishcompany’s document process- said, “Being customer-drivening resources (DPR) team began means we’re always looking to“bundling” multiple documents share content with our custom-for the same recipient in a single ers in a better way. Managing theenvelope. Combined with an volume of paper mail and theincrease in electronic communi- channel of delivery (electroniccation, the results were impres- vs. paper) helps us to controlsive. Between 2004 and 2017, expenses and improve the overallthe company reduced its outgo- customer experience.”ing mail volume from 117 millionpieces to 39 million. That reduced In addition to customer mail,average per-household mail from DPR’s print shop supportedAmerican Family from 31 enve- American Family’s employ-lopes to 14. The changes helped ees, agents and corporateimprove customer satisfaction, brands with print and designincreased efficiency and cut post- needs across the enterprise. Itage expenses from $32 million produced materials at a lower cost in-house or negotiated with vendors for favorable rates.272 | A New Era — With Tough Times Ahead

ABOVE: At the 2007 All American convention in Montreal, CEO Dave Anderson stressed the value of agents and assured them ofstrong company support as American Family explored additional ways customers could deal with the company.agents providing great value; what we have BELOW: Fast, fair and caring claim settlements boost customer satisfaction. Ato do now is develop products and deliversome of the service tools customers want tornado in Greenberg, Kansas, killed 10 people on May 4, 2007. Area agentsonline, which we don’t have right now.” reported positive customer reaction to American Family’s quick response to Greensburg’s needs. A customer (left) talked with Catastrophe Oper-A FLASHING RED LIGHT: ations Administrators Chip McAleer and James Stidham and CatastropheTHE POLICY COUNT DROPS Claim Senior Adjuster Christi Kingren.Company officers grew increasingly worriedabout growth during 2007. The year wouldsee a precipitous 35,000 drop in policies-in-force, a stunning development afterseeing an increase of nearly 3 million poli-cies over the previous decade. The downturn,however unwelcome, was not a surprise tomost leaders. RPM had unsettled many agents. Notonly did they have to deal with a new pric-ing system, they were continuing to faceemotional conversations with custom-ers confronted with price increases, someof whom canceled. “Our agents were basi-cally playing defense, spending most of their Dare to Dream | 273

ABOVE: Gerry Benusa (right), chief sales officer, spent much rating factor, brokers often referred many higher-risk custom- ers to agents. Once RPM was implemented, this referral sourceof his time with agents and employees in the field, listening dried up. “We knew we had to suffer through some tough timesto their opinions and explaining company plans and actions. to get where we wanted to be in pricing,” Zwettler said. But asHe’s shown here talking with Jeff Hodkin, an agent in Car- Benusa later reflected, “We knew we’d see a drop in policies inthage, Missouri. force (PIF) due to RPM, but couldn’t anticipate the future down- turn in the economy as well.” However, preliminary RPM property results were showing the controversial initiative was working. The company’s highest risk customers had loss ratios of 93 percent in previous years; for every dollar they paid in premium, the company paid 93 cents in losses. But early results showed after implementing RPM, the high-risk customer group’s loss ratio decreased to 66 percent. CUTTING EXPENSES, SHEDDING PRODUCT LINES With a declining policy count and soft revenue growth, expensetime saving customers as opposed to getting new ones,” said management became a priority. The company’s expense ratio,Gerry Benusa. traditionally better than its peers, was rising. And leaders knewBenusa also knew many American Family agents had there were some big-ticket items coming down the pike: newstrong relationships with mortgage brokers in their commu- technology for products and pricing, as well as higher adver-nities. Because the company previously hadn’t used credit as a tising expenditures. Controller Vice President Kari Grasee brought in McKinsey & Company consultants to study support divi- sion functions and present optionsBELOW: Controller/Vice President Kari Grasee led expense management efforts in 2007, for discontinuing or outsourcing some work. The year-long analysisshown here at a meeting with Dave Sebald, Investments and Dennis Loper, vice presi- unsettled many employees, includ-dent loss reserving. ing officers leading divisions that could face mandatory cuts. Toward the end of 2007, the company announced American Family Financial Services (AFFS) would stop writing new loans. Executive Vice President Brad Gleason noted, “The marketplace has changed and customers are sending us a clear message: They prefer to purchase loans through their banks and car dealers rather than through their insurance company.” Agents had also made it clear that AFFS wasn’t a priority, writing only 70 new loans compa- ny-wide in September 2007. AFFS274 | A New Era — With Tough Times Ahead

STEERING TEEN DRIVERS TOWARD GOOD HABITSEvery parent knows it, and taught the importance of safe respon- statistics back it up: New, driving habits. sible drivers than inexperienced teen driv- before they started the program. ers are at high risk for accidents. Teen Safe Driver became They’re easily distracted, espe- a remarkable success, and cially with a smartphone or other the company received posi- teens in the car. tive coverage for it on several national news broadcasts. In 2007, American Family Several studies during 2007- introduced the Teen Safe Driver 2015 showed dramatic Program, offered free of charge improvement among the to auto insurance customers with riskiest teen drivers — a new teens behind the wheel. drop of up to 70 percent in dangerous driving events, The innovative program while seatbelt use among provided exclusive in-car tech- program participants nology that captured erratic or increased to more than risky driving behavior. Video foot- 96 percent. age of unsafe driving events (hard braking, speeding, swerving, etc.) Even though teens was shared only with the parent, might initially resist teen and a personal driving having Big Brother coach who offered valuable and cameras in their personal feedback. The program cars while they drive, encouraged conversation and most teens who completed the open communication between program acknowledged they parents and their teen drivers and became better, safer and moreVice President R. D. Boschulte had lobbied to end the line for policy administration the following year. Existing Health Linesyears, realizing that the operation lacked sufficient scale. He employees transferred to the Brokerage & Alliances division toconcluded, “We really don’t want to be in the banking business.” manage the transition, and some ultimately lost their positions as the line terminated. Just a few months later, leaders decided it was time to endHealth Lines, the company’s product offerings for individual THE RIGHT PEOPLEhealth insurance policies. With a continuing decline of in-force IN THE RIGHT PLACEShealth policies, revenue losses and steep rate increases over theprevious decade, it was clear the company had to align with a Throughout 2007, Salzwedel continued to move people aroundlarger health insurer to succeed in an increasingly competitive on his executive team so they could gain new skills and knowl-marketplace. American Family finalized an alliance with the edge about the company and industry. In September, Dan KellyAmerican Enterprise Group to provide a portfolio of health became human resources vice president and Gerry Benusainsurance products agents could sell, underwritten by American moved from marketing to vice president of commercial/farm-Republic. American Family would share the underwriting risk ranch. Betty Bergquist, Utah/Idaho state sales director, cameand rewards of increased premium growth and would transferthe existing book of health business to American Republic for Dare to Dream | 275

inside as education vice president and Nevada Sales DirectorJohn Thedinga was named Valley Region sales vice presi-dent. Tom Mooney had impressed leaders with his significantimprovements in the billing operation and late in the year, hewas named director of a new Customer Experience corporatestrategic initiative. Pam Stampen replaced him as billing director.A NEW INVESTMENT APPROACH ABOVE: Chief Financial Officer Dan Schultz initiated significantIn May 2008, longtime Investments Vice President Tom King changes in the company’s investment approach, moving moreleft the company after managing the company’s investments for of the investment portfolio to management by outside firms.more than two decades. Chief Financial Officer Dan Schultzcarefully analyzed the company’s investment portfolio and itsmanagement, concluding greater diversification should becomea priority. He also believed American Family should movea percentage of the company’s portfolio to outside firms formanagement. Schultz and Salzwedel met with major investment firms inNew York, where they attended a seminar led by Peter Gunder,whose Chicago firm provided outside investment managementservices. One thing led to another, and after a nationwide search,Schultz and Salzwedel selected Gunder as the company’s newchief investment officer.ABOVE: The 2008 stock market crash and Great Recession had a huge impact on insurers, severely dampening the vehicle andhome construction markets.276 | A New Era — With Tough Times Ahead

Dennis Loper Mary Theilen Greg Gisi Jeff PrestonINSURANCE year. It was the third consecutive premium of $111 million annu-FOR INSURANCE year of heavier-than-expected total ally between 2009 and 2016 forCOMPANIES storm activity. single occurrence and aggregate protection combined, but had lossReinsurance is insurance In reaction to these losses, recoveries of $41 million in 2010, for insurance companies, in 2009 Property and Casualty $414 million in 2011 — one of the and American Family buys (P&C) Loss Reserving Vice most active storm years in its it for the same reasons people President Dennis Loper recom- history — and $120 million in 2014. and other businesses do: to build mended continuing occur- financial protection by transfer- rence reinsurance and adding In 2010, American Family made ring some risk and sharing losses. an additional layer of aggre- the strategic decision to get into gate reinsurance, which would the assumed reinsurance busi- Maintaining this type of insur- limit the impact of an accumula- ness: The company would sell rein- ance is critical during years when tion of storms in any given year. surance and collect premiums for severe storms create losses greater Aggregate reinsurance combines sharing other insurance companies’ than budgeted. Reinsurance helps all individual events totaling more risk outside American Family’s ensure American Family’s finan- than $10 million but less than operating territory. That initiative, cial stability, which is important $300 million, providing a recovery led by P&C Loss Reserving Vice because customers want to do when that pool of losses exceeded President Mary Theilen, would not business with a financially strong a $550 million threshold. only add revenue but would spread company and insurance regulators risk across the globe, instead of and rating agencies view reinsur- American Family’s reinsurance maintaining its concentration of ance favorably. coverage is reviewed annually policies primarily in the Midwest. and has changed over the years. Risk Management Director Greg For many years, American In 2016, for example, the aggre- Gisi got the program off to a Family purchased “occurrence gate coverage provided cover- strong start, acquiring $2.5 million reinsurance” for its property and age if the company’s total CAT in written premium from 13 compa- commercial books of business for losses for the year were between nies by the start of 2011. large individual storms and earth- $1.1 billion and $1.45 billion. The quakes. In the first decade of the $10 million event deductible By 2015, Gisi was president of 21st century, American Family’s was eliminated in 2014, with all the company’s reinsurance/broker- coverage had the company paying storm losses counted toward the age and alliances insurance solu- the first $300 million — the deduct- aggregate. To accommodate the tions division. Gisi remained with ible — and then having $800 additional losses that would be B&A and the company hired Jeff million of coverage for each event. counted from the removal of the Preston, managing director/treaty But during 2008, the company deductible, the trigger amount reinsurance broker at Aon Benfield, experienced just over $1 billion in was increased from $550 million Inc. in Chicago, as its new vice storm losses, double the amount to $900 million at the time. president of reinsurance, account- planned, even though there were able for both reinsurance protec- no single large catastrophes that While necessary, reinsurance tion and reinsurance assumed, can be expensive. The company reporting to CFO Dan Kelly. paid an average reinsurance Dare to Dream | 277

else’s did, but it could have been much worse. The one thing our customers should know is that we’re still financially stable and strong, and in a position to meet our obligations to them.” Gunder’s calm and thoughtful messages were well-received. Once again, American Family’s long tradition of prudent finan- cial management paid off. However, there would be no quick economic recovery for the country or American Family. The effects of the financial meltdown would resonate for years. On top of that, payouts for catastrophic storms in 2008 would top a billion dollars for the second time in three years. And the company’s sales struggles continued. Annual revenue dropped $125 million as policies-in-force declined by another 189,000. The triple-whammy took its toll. Policyholder equity dropped $871 million. PUTTING THE CUSTOMER FIRST Despite the storms and economy, American Family made signifi- cant progress improving customer service in 2008. Director Tom Mooney and his successor, Mary Wong-Young, recruited several high-performing employees from across the company for the new Customer Experience strate-ABOVE: The 2008 stock market fall challenged American Fam- gic initiative. Compact employeeily’s new investment vice president, Peter Gunder, shortly teams accepted specific challengesafter he arrived. He reassured employees, agents and cus-tomers that the company remained financially strong. and were provided flexibility to Two months later, the stock market crashed.The Dow Jones plan and rapidly complete their Mary Wong-Youngindustrial average fell from 11,483 points on September 19 to7,882 just three weeks later. objectives. To a person, they were Like most Americans, employees and agents at American excited about quickly achiev-Family were worried. Their savings, pensions, IRA values andfinances were declining. And they were also deeply concerned ing tangible results, somethingabout how the economy and markets would impact the company.Some agents reported policyholders were starting to ask about that didn’t always happen in theirAmerican Family’s financial strength. day-to-day work. McKinsey & Gunder offered reassurances, stressing the company’s abilityto weather the storm. “American Family’s investment philosophy Company consultants providedfocuses on high-quality stocks and holding them for the longterm,” he said. “Our portfolio took a bit of a tumble like everyone experienced counsel and Public Relations Vice President Rick Fetherston served as executive advisor. The projects were prior- itized by a committee of agents Pat Vanden Avond and employees who evaluated customer research. Pat Vanden Avond directed three major “quick launch” proj- ects that dramatically improved customer service. In a matter of 120 days, 23 uncoordinated call centers across the enterprise278 | A New Era — With Tough Times Ahead

Vanden Avond’s team worked on a resource allocation model for each care center, making sure staffing levels could adjust to fluctuating call volumes. She knew the ability of customer service reps to resolve issues during the first call remains one of the most critical customer-satisfaction drivers. Changes were made to give care center representatives the skills, knowl- edge and authority to resolve more customer issues at the time of the call. Tim Constien, claims vice president, also led a team toKelly Whalen Barbara Rashke improve customer claims satisfac- tion. New procedures simplified the claim reporting process sowere consolidated into three primary contact centers under one that care center reps could gathermanagement team. Customers who previously had to choose all relevant information at theamong 10 different numbers to call American Family could now first notice of loss, rather thanremember just one: 1-800-MYAMFAM.That team, managed by asking the claimant to provideKelly Whalen and Barbara Rashke, developed a system that for the same facts in another call.the first time offered customers 24/7 service across the board. A Policyholders filing a claim coulduser-friendly interactive voice response (IVR) system provided learn the name of their adjustereasy navigation with customer-friendly language. “The goal was on the first call, rather than wait- Tim Constien to respond to the customer with ing for a second or third call back. the least number of transfers or And every person filing a claim delays, regardless of when they would receive a survey to see how called,” said Rashke. “The team the company did. The company’s was awesome and worked incred- website was improved making ibly long hours.” it easier for customers to find A Model Experiences team, answers to basic questions about led by Todd Straub, identified the claims process. core behaviors and responsibili- Lolly Lawrence, personal ties for customer-facing employees lines business technology direc-Todd Straub to achieve consistent service across tor, and her group redesigned the Lolly Lawrence the company. The project’s posi- coverage summary letter sent totioning statement said, “The most critical aspect of customer every policyholder, improvingservice is the conversations that service center representatives clarity and accenting discounts.have with our customers every day.” The team produced training Another team led by Dawnguidelines on topics such as managing challenging calls, placing Mortimer, marketing and fielda customer on hold and advocating for a customer throughout automation manager, improvedan interaction. Later, Access Direct enabled a switchover to an My Account, the customer portalAmerican Family call center when an agent’s telephone number through which individuals couldwasn’t answered within a certain number of rings. Within 90 access their information online,days, customer complaints about not being able to reach an agent so customers could more easilydropped by a third. create and access their accounts, Dawn MortimerVanden Avond, who later was named customer care inte- view or print their policy declara-gration director, continued to focus on how to provide superior, tion sheet or auto coverage summary letter. Still another groupconsistent customer service across the claims, billing and set up a system so customers could pay their bills by phone with-marketing customer care centers. More than 600,000 people out the help of a customer service representative. Pam Stampen’sa month were calling the new 1-800-MYAMFAM number. team also completely redesigned the bill to make it simple and Dare to Dream | 279

ABOVE: Customers Russell and Brenda Ott (left) were helped by agent Ollie Stuckmeyer and claims adjuster Eric Boyle after theirSt. Louis-area home burned down in 2008. Boyle started adjusting claims for American Family in 1998. self-explanatory. (This was always A MARKETING MAKEOVER a critical challenge because the The company announced its new marketing vice president in March 2008, when Lisa Rojas Bacus joined the company. She company was sending 35 million had worked for the Ford Motor Company for 22 years, serving most recently as its director of global strategy, reporting to the bills annually, the most common chief marketing officer. interaction with customers.) Executive Vice President Al Meyer said, “One of her mandates at Ford was to make that company more marketing- The progress in little more than focused and savvy, and that will be one of her mandates here as well.” That was a bigger challenge than it appeared because American a year was impressive, but every- Family’s marketing division had long focused on sales and agency support rather than pure marketing. Aggressive competitors were one knew more work was needed. spending big bucks advertising their brands and American Family was also behind the curve with social media and digital marketing. In 2009, Customer ExperienceMatt Inman became a full-fledged department in the marketing division, with anew director, Matt Inman. He said his focus would move beyondthe transactional improvements to anticipating customer needsto create an “ideal experience.”280 | A New Era — With Tough Times Ahead

GOING THE called from Ontario, Oregon, tow truck driver to give her a freeEXTRA MILE an hour away, saying her car ride back home. Then, he helped wouldn’t start. Dover wasn’t her get a rental car at AmericanEagle, Idaho agent Pete surprised because “I encourage Family’s preferred rate in Boise. Dover made American my customers to call me when- Family’s corporate values ever they need help.” “It was absolutely the best of caring and ease of convenience customer service I’ve ever expe- a reality for one of his policy- He arranged to have Sodhi’s rienced,” said Sodhi. “I always holders. On Memorial Day week- car towed back to her hometown thought all insurance companies end 2008, customer Kathy Sodhi and had the bill sent directly to were the same, but now I know his office, and he persuaded the that is absolutely not true.” Bacus said her primary goals related to its employees. Sick leave policies, flexible work schedules and domestic partner coverages were expanded.“Jeans Day”became at the time included improving the an every-Friday option and a no-tobacco policy went into effect company-wide. Some employees were given the option to work company’s customer research efforts, from home, and everyone started receiving paid time off for volun- teer work. Salary grades were streamlined from hundreds to just 25. introducing social media marketing A CRITICAL HIRE and developing a new advertising FOR THE COMPANY’S FUTURE campaign. She said the keys to Toward the end of 2008, Anderson, Salzwedel and the senior leadership team concluded the company could wait no more; marketing success were “knowing American Family had to invest big dollars and tremendous our target customer as well as we know our best friend and know-Lisa Bacus ing what makes American Family stand out from the competition.”In another part of the company, Dan Kelly was bringing afresh approach to his new role as Human Resources vice president,beginning three years of significant changes in how the company Dare to Dream | 281

energy into creating new products and more sophisticated pric- initial observations seemed to echo those of Dave Andersoning supported by state-of-the-art technology. The leaders knew when he took over I/S a dozen years earlier, a post he held forit would be a massive, expensive initiative, and believed the I/S two years amid the massive Y2K project, which inhibited hisdivision needed a new leader to make it happen. ability to make big changes. “It seemed like we had every single piece of hardware or software ever created, with little standard- Salzwedel asked Executive Vice President Mary Schmoeger ization,” Kirkconnell said. That was because many business units,to find the right person. After an extensive search, the company particularly the lines and marketing, had their own technologyhired Kristin Kirkconnell, chief information officer for an departments with their own preferences. “I/S was still an orderAtlanta company that parented six utilities in Georgia, Virginia, taker. Divisions would come to I/S and say ‘I want this,’ and weTennessee, New Jersey and Maryland. Kirkconnell was a high-en- would do it.” She pressed for standardization and simplificationergy, no-nonsense executive with a track record of getting things of technology to help projects move along more quickly.done. Growing up in a military family, she said her philosophywas that of Gen. Colin Powell: Delegate and empower, but keep Kirkconnell also thought the I/S structure was rigid andyour eye on the details. “The details and your gut will always tell limiting because many employees were knowledgeable about ayou when things are going right or wrong,” she said. piece of the technology pie, but couldn’t provide value outside their small area of expertise. She transitioned to pooled resources After Kirkconnell arrived, she found a technology opera- so employees would routinely serve multiple clients. Most of thetion much like others she had seen at mature companies. HerBELOW: In 2009, shortly after she arrived, new Information Services Vice President Kristin Kirkconnell (blue cap) hosted a Spring-Fling outside the national headquarters to meet her new employees.282 | A New Era — With Tough Times Ahead

I/S budget at the time was spent on maintenance. She discov- division before moving into strat-ered her division “wanted to build everything,” but her experiencetold her that often cost more, and was always more time-consum- egy and business development;ing than buying technology. She initiated a major philosophicalchange to “buy and configure” rather than building from scratch. Lisa Bacus, marketing vice presi-Just a year later, that was the approach she would take leadingthe biggest and most important project in the company’s history. dent and EVP, led efforts to create Kirkconnell was one of several executives hired in the late the Agency Council and success-2000s from outside the company. Anderson, Salzwedel andCFO Dan Schultz had agreed “we needed some talent from the fully pushed to create a highlyoutside,” said Salzwedel, which was something that had rarelyhappened throughout much of the company’s history with its successful branding campaign;traditional culture of “promote from within.” and Telisa Yancy, who would tran- In a short period of time, the company brought in otherkey people who had significant impacts: Peter Gunder, chief sition marketing from an agency Telisa Yancyinvestments officer, made significant improvements in that support division to a genuine marketing operation, eventually earning the title of chief marketing officer. The successes of these and other leaders “opened our eyes to the strategic placement of outside talent in key areas,” said Salzwedel, adding that “Dan Schultz helped make this mindset shift happen and it has been a critical part of our cultural change.”BELOW: Six former leaders of the Life Company gathered to celebrate its 50th anniversary in 2008. They included Jeff Bosco, BobKoch, John Reed, Pete Walton, Joe Tisserand and Jack Salzwedel. Dare to Dream | 283



We’re still in a recession. We’re not going to be out of it for awhile, but we will get out. — WARREN BUFFETT, prominent investor14 FORWARD, DESPITE THE GREAT RECESSION

CHAPTER 14 | FORWARD, DESPITE THE GREAT RECESSIONMost observers pinpoint December 2007 as the start of “The Great Recession,” the multi-year arc of financial disaster that started with a meltdown in the U.S. housing industry and spread throughout the globe over the follow-ing years. By 2009, the insurance industry was facing major There were bright spots: a $198 million net gain from oper-repercussions from the financial disasters because property casu- ations at year’s end 2009. The result was that $660 million wasalty companies rely on new vehicle and home sales to fuel growth. added to equity, sparked by a $440 million jump in the investmentUnfortunately, frightened or out-of-work consumers were in no portfolio, an important signal to policyholders that Americanmood to make those purchases. Car and truck sales were down Family had sufficient financial strength to meet its obligations.17 percent and automakers saidit would take five years to returnto 2005 sales levels. New hous-ing starts were down 53 percent BELOW: Consumers were jittery in September 2008 as they worried about the stabilityfrom the housing bubble peak in2005 and many empty homes sat of the economy, particularly the stock market. In Cobb County, Georgia, drivers linedon the market. Not surprisingly, up outside gas stations for fuel on September 22. One week later, the major financial markets lost 30 percent of their value.American Family’s property casu-alty premium dropped 6.2 percentto $5.5 billion in 2009, withannual revenue dropping by nearly$382 million.Responding to critics whopointed out many failing WallStreet companies had previouslyreceived strong financial ratingsfrom analysts, A.M. Best alsotightened up its ratings across theinsurance industry. Best continuedAmerican Family’s A rating, butadded a “negative outlook,” primar-ily because of the previous year’sreduction in surplus and threeprevious years of huge storm losses.286 | Forward, Despite the Great Recession

HELLO, GEORGIA! area was booming, and that’s where Sales Director Michael Riggs would start out with 29 agents. Seven years later, with Riggs’handIt was that financial strength that allowed American Family to still at the helm, 12 of those original agents remained on board,enter the Peach State on New Year’s Day, 2009, in the midst of as well as five of the six original agency sales managers.The state’sthe worst recession in generations. Compared with other states, sales team numbered around 350, including 120 agents, primar-Georgia had experienced solid growth in population and jobs, ily in Atlanta, Macon, Columbus and Augusta. Policies-in-forcefueling home construction and vehicle sales. The Atlanta metroABOVE LEFT: Georgia’s first state sales director, Michael Riggs, concentrated on finding and training new agents to serve thefast-growing metropolitan Atlanta market. ABOVE RIGHT: CEO Dave Anderson raises the Georgia flag outside the National Head-quarters in January, 2009.BELOW: Georgia agent Kye Wilson (center) joined others at the Georgia grand opening ceremonies. She was an agent in Nevadabefore moving to Georgia. She left for Chicago in 2012 and returned to Georgia by 2017. Dare to Dream | 287

A BIG JOB FOR A BIG TEAMExpanding into new states the greater Atlanta area, provid- Lines employees. Claims also with the agency distribution ing computers, phones and delved into Georgia law to ensure model is a costly, complex printers. American Family’s claim handling and lengthy process involving practices were in compliance with hundreds of people. Marketing Meanwhile, actuaries were Georgia law. provides overall program manage- performing competitive research, ment for expansion, with a state working with Personal Lines Many other areas would also expansion implementation team and Commercial-Farm/Ranch, be involved in the move. Legal spending tens of thousands of making pricing recommenda- Division attorneys examined hours to plan and implement the tions, updating rules manuals rules and regulations. Marketing entry. The Controller Division plays and filing the necessary paper- worked with human resources a critical role, creating complex work to put the Georgia rates to find talented new agents and financial models that ultimately into effect. Customer Billing had created a “Hello, Georgia” adver- determine whether the company to devise a new process to deal tising campaign, following the enters a new state. Doug Stoffels with a Georgia law that requires template used in earlier state led production of nearly 20 of a 30-day advance payment for expansions. these models during the years of private passenger vehicles. extensive geographic expansion. The product lines worked with Before a single employee could many support divisions to prop- Take Georgia, for example. In be hired or agent appointed in erly file their products, making 2007, after months of analysis, the company announced it would Georgia, the Human Resources sure all complied with Georgia’s enter the Peach State in 2009. Division needed to research regulations. Information Services That began a three-month process Georgia’s employment laws, determined what software and in the then-Government Affairs demographics, compensation, hardware would be needed to & Compliance Division to assem- employment and business taxes, support customers, agents and ble all the necessary application and licensing requirements for employees. information for the state insur- agents. More than 30 Education ance department. State regulators Division employees spent 2,000 In all, the Georgia state entry want to know everything about a hours planning and delivering involved 557 people spending potential company’s history and training to new agents and sales 97,000 hours on 35 projects, an operations before they will okay managers, Claims and Personal incredible amount of teamwork such a move. from every area of the company. Once Georgia was identi- fied as an expansion opportu- nity, the company’s Business and Workplace Services (BWS) divi- sion immediately started find- ing office space in the new state, opening a temporary office early in 2008 for State Sales Director Michael Riggs and his district sales managers. Working with Information Services, construc- tion of the new state office was completed in October. BWS also located and set up three district offices and identified locations for 17 agency marketing centers in288 | Forward, Despite the Great Recession

ABOVE: Dwayne Ellis was one of the company’s first agents in Idaho and grew his agency rapidly through extensive customercontact.had grown to more than 145,000. (In 2016, Riggs would become underwriting, both as agents and corporate, was not as high andsales vice president for the Central Region.) tight as it could have been.” He was learning that retention was just as important as new sales and focused on personal insurance As the Georgia operation got up and running, personal lines reviews (PIRs) and consistent customer contact. His agency’sand sales were working hard to improve profitability in other policy count surpassed the 9,000 mark in 2016.expansion states such as Nevada, Idaho and Utah. New custom-ers were coming on board, but turning a profit on new business ‘AMERICAN FAMILY’S PROPERTYis challenging for any insurer in a new territory since new players LINES ARE BROKEN’are susceptible to higher loss ratios because of a lower premiumbase, less-experienced agents, less underwriting experience and The expansion states weren’t the only areas of the company withfewer lines per household. So the goal, as always, became to profit problems. In June 2009, the senior leadership team toldincrease market share while keeping losses down. employees and agents, “Our property lines are broken and need to be fixed.” That was an understatement. Agent Dwayne Ellis in Boise, Idaho, was typical of a newexpansion state agent. He had started doing business in 2002, Over the previous 20 years, American Family had achievedquickly producing 100 applications per month. By 2009, he had an underwriting profit in homeowners only three times — 2003,6,200 policies-in-force in his agency, with four employees still 2004 and 2005 — and that was primarily because of relativelyproducing 100 applications a month. That kind of growth “wasa benefit,” Ellis said, “but there were repercussions. Maybe our Dare to Dream | 289

In 2010, American Family’s four claims care centers were collectively aver- aging 28,500 calls per week. Between July 17 and 23 that year, heavy flood- ing resulted in 110,000 calls, setting a new record. Standard homeowners and renters policies do not cover flood damage. Flood coverage is avail- able through the National Flood Insurance Program. Auto insurers do cover flood damage to vehicles through comprehensive coverage.290 | Forward, Despite the Great Recession

low storm losses. From 2006 through 2008, the company suffered claim payments were fair and accurate, adding more propertymore than $1.1 billion in homeowner underwriting losses. inspections and, eventually, providing more sophisticated pric-During the first decade of the new century, the company paid ing. Westrate viewed it as his “second big career challenge” afterout $1.15 in claims and expenses for every dollar of homeowner his leadership role in RPM and he was right: His performancepremium received. would ultimately help him earn selection as executive vice presi- dent in 2011, chief operating officer for American Family agency Property profitability was an industry-wide problem but in 2014, and enterprise president in 2017.American Family’s losses were higher than the industry average.The problem took on new urgency after the struggling economy BITING THE BULLETand heavy storm losses forced the company to dip into surplusto cover costs. To boost growth company-wide, Salzwedel decided to bite the bullet and do something that would have been unthinkable just Personal Lines Vice President Bill Westrate, who succeeded a decade before — customers would be given online and callJoe Zwettler when Zwettler moved to head Brokerage & Alliances, center purchase options in all states where the company hadwas assigned primary responsibility for solving the problem, with agents. Gerry Benusa, who succeeded Al Meyer as sales execu-assistance from Executive Vice President Jerry Rekowski. The tive vice president when Meyer moved to lead the life company,pair formed a cross-divisional Property Profitability Council to told agents the new Integrated Channels approach wasn’t adevelop solutions, which, in the long run, helped return property threat, and in fact would bring them new customers who couldlines to profitability. Key elements included modifying contractlanguage, a renewed emphasis on disciplined underwriting, calcu-lating property replacement cost values more accurately, ensuringBELOW: Bill Simon, digital marketing director, made many presentations before agents urging them to reach customers throughnew channels. Dare to Dream | 291

SERVICE NEVER SLEEPSAmerican Family’s call Wisconsin, providing service to one of truth for an insurance company. centers respond to state — Arizona. It was a six-month And it’s not always going to customer questions and experiment — strongly supported happen between 8 a.m. and 6claims 24 hours a day, seven days by Claims Vice President Darnell p.m., Monday through Friday.”a week. But that wasn’t always the Moore — that went so well itcase. Before American Family’s expanded to Minnesota in 1998 and By 2017, the Claims Call Centercall centers provided round-the- to the rest of the operating states employed more than 500 repre-clock service, customers reported by April 2000. sentatives working in threeclaims to their agents and often cities, handling approximatelycontacted them about billing and Providing round-the-clock 2.1 million inbound calls a year.other service questions, as well. coverage to all operating states Peak times for claims calls were meant hiring more people and from 8 a.m. until noon. Recent While agents enjoyed helping developing new computer and customer-driven updates includedtheir customers in this way, doing phone systems, which was not increased representative avail-so put huge demands on their simple, but it was an investment ability, reduced hold times and 80time and didn’t always provide worth making. percent of calls answered withinconsistent customer experiences. 20 seconds. “Most people may only have The Claims Call Center began one claim in their life,” Northwest A call center opened to answersupporting agents with 24-hour Regional Sales Vice President customer billing questions duringcoverage on June 2, 1997, with Pete Walton said in 1998. “But business hours only in 1998 withrepresentatives in Madison, when they do, that’s the moment staff in St. Joseph, Missouri;BELOW: Sales & Service Operations Vice President Candy Embray and Tim Johnston, sales/service care center di-rector, focused on always exceeding customer expectations for policyholders using American Family’s call centers.292 | Forward, Despite the Great Recession

Eden Prairie, Minnesota, and were the ones who made it work.” questions, sell certain productsMadison, Wisconsin, but calls still Again, the service was popu- directly to customers, providecame in after hours when there sales support to agents and offerwas no one to answer them, caus- lar, but customers wanted more better first-call resolution.ing customer and agent frustra- than just their billing questionstion. In early 2008, Customer answered. They wanted to add By 2017, the Sales and ServiceBilling, Servicing and Account coverages and take care of other Care Center employed approxi-Management started answering small policy-related tasks. Most mately 400 representatives work-questions 24/7. billing representatives weren’t ing in three care centers, as well licensed to do these things, but as multiple work-from-home loca- “We were asked to find a way to wanted to meet customer needs, tions. The care center handledmake 24/7 service work,” said Pam so the Marketing Call Center approximately 2.5 million phone,Stampen, who oversaw billing at and the Personal Lines Credit chat and email interactions fromthe time. “The team members rose Response Unit were brought agents and customers annually.to the occasion and figured out a together later in 2008 to provide Other customer-driven updatesway to staff those hours initially a greater focus on customers. included expanded self-ser-without us hiring more people. vice options, the ability to serveThey volunteered to work week- Cross-training and licens- customers online through chatends and night shifts. They did ing started in 2013 and was and email, as well as an expandedmore on their own than I would completed by the end of 2014. portfolio of sales-and-serviceever have asked them to. They With these increased skill sets, offerings. reps were able to handle moreBELOW: Shown in a Claim Customer Care Center were Sam McWilliams, Ricardo Rodriguez and Julie Wilson. Dare to Dream | 293

be offered additional products. A new policyholder buying auto In May, Marketing Vicecoverage through a call center would be referred to an agent,who might sell the new customer additional lines of coverage to President Lisa Bacus announcedmeet their needs. a five-year initiative to drive new Salzwedel was upfront with the field, telling agents, “Insome cases as we enter new geographic territory, we will use business in the Hispanic market.direct marketing models to attract new auto customers becauseit allows us to enter new markets faster and at less cost.” He said She had a strong understand-the company would consider adding agents later to sell additionalproduct lines. Just a few years earlier, the company would have ing of the demographic, in parthesitated to move so aggressively into direct marketing, fearingnegative agent reaction. However, as newer agents had come on because both of her parents hadboard, their familiarity with and use of the internet and call centershelped them understand the move, which helped mute potential come to America from Mexico.dissent. In addition, effective communication through the AgencyCouncil and face-to-face meetings reassured agents they remained She understood that part of pursu- Lisa Bacusat the heart of the company’s relationship with its customers. ing the American dream comesHELPING THE FIELD from creating financial stability —ATTRACT CUSTOMERS and that stability should include buying insurance to protect aPolicies-in-force had declined another 189,000 in 2008.Company leaders decided to invest big dollars in a 2009 New family from misfortune. The program featured heavy advertisingCustomer Growth Program to help agents on the front line. through television, radio, newspapers, billboard, online and direct mail. Minneapolis District Sales Manager Tyrone Knight was an enthusiastic backer, and said, “The Hispanic market is grow- ing faster than many others. Agents who get in on the ground floor will build a loyal customer base and referral network.” Sylvia Ruiz, an agent in Peoria, Arizona, agreed, “It’s really helped build our brand and given us more credibility. It’s a lot easier to sell to someone who already knows who our company is.” Another growth initiative educated agents about how best to close internet leads. Agents were already purchasing thousands of internet leads annually, but a significant number of the leads weren’t followed up. The company announced it would purchaseBELOW: American Family’s Hispanic marketing campaign used traditional media as well as community events like the Festival DeLa Villita in Chicago where visitors could sign up for door prizes.294 | Forward, Despite the Great Recession