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NJM says it’s covered

Rating agency raises concerns, but at centennial, insurer is confident it can weather a stormy future

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    Eric Stenson tours a museum New Jersey Manufacturers has set up for its centennial. The insurer says technology will be key to its next 100 years.
    Eric Stenson tours a museum New Jersey Manufacturers has set up for its centennial. The insurer says technology will be key to its next 100 years. - (AARON HOUSTON)

    That it celebrated its centennial during the first week of the 2013 hurricane season is an interesting milestone for New Jersey Manufacturers Insurance Co. Nearly all its business comes from the relative wealth and population density of the Garden State, which has helped it thrive — but having all its eggs in a basket on the wild Atlantic means its payouts to policyholders have jumped in a time of increasingly severe weather.

    NJM is confident it has the financial strength to withstand nature's fury, but as the company embarks on its second century, it finds it must change how it responds to disasters that unleash tidal waves of insurance claims, as well as how it interacts with policyholders.

    The answer in both cases, according to the West Trenton-based insurer, is technology, a new strategy for a company that's long eschewed traditional advertising for growth by word of mouth.

    “Social media is the new word of mouth,” said John W. Hardiman, director of personal lines policyholder services and a 19-year veteran of the company. By coincidence, NJM's Facebook page happened to go live in the week prior to Sandy, and “policyholders used Facebook as another avenue to talk about their claims and get quick response — we monitored it 24 hours a day,” he said.

    The next step is enabling customers to file claims electronically from NJM's website, which John Fink, assistant vice president of personal lines, said will be in place “before we have our next catastrophe.”

    The target date is July 15 for website claims to go live, he said.

    Electronic filing and social media represent great leaps into the modern age for a company that has done virtually no advertising since its founding in 1913. It's been able to grow by word of mouth, since only member companies of the New Jersey Business & Industry Association, their employees and state government workers are eligible to become customers.

    But executives realize they must move into new channels.

    “We pride ourselves on having that human touch — to be able to call and connect with someone,” said Fink, who has been with NJM for 24 years. “But what we saw with Sandy was unprecedented; the volume was out of control. We got up to a thousand calls an hour after Sandy hit.”

    NJM's financial strength has earned it an A-double plus rating from A.M. Best, the highest score the insurance rating company awards. And while NJM spokesman Eric Stenson said only 17 rated property/casualty insurers — or 2 percent of all rated insurers — got that rating in 2012, Best in March lowered NJM's outlook to “negative” from “stable.”

    Best cited NJM's “relatively tight business concentration, mainly within New Jersey,” which exposes NJM “to severe catastrophic weather events; the four largest weather events in NJM's history have occurred in the past three years,” including Irene and Sandy.

    Best said the risk to NJM from its reliance on New Jersey is somewhat offset by its “historical track record of consistently strong earnings, superior capital position and extensive local market knowledge,” all points Fink emphasized in discussing its outlook.

    “We are well capitalized and well positioned to absorb the catastrophes that have been coming our way,” he said. “We remain strong, and we're ready for our customers should the next Sandy roll around.” NJM reports a surplus of $2.1 billion.

    A chief reason for its financial strength is that it sells insurance directly to customers, meaning it doesn't have to pay agents, most of whom are familiar with NJM's reputation. Insurance agent Glenn Tippy, president of Gerrity, Baker, Williams Inc., in the Flanders section of Mount Olive, called NJM “a giant in New Jersey. It is a company that does a great job in many aspects, and they are an admired competitor.”

    Since NJM targets employees of NJBIA member companies, referrals from co-workers are key to its growth.

    “We want employees to be thinking of NJM as an exclusive employee benefit, equal to some of the other benefits the employer offers,” Hardiman said. “Because we have such a presence within a lot of our member companies, we're part of their corporate culture — they do the advertising for us.”

    And while it may be building its brand on Facebook, NJM still isn't interested in television or radio commercials. “Our policyholders are sitting next to another employee who is eligible for NJM, but just doesn't know it,” he said. “They are delivering the message for us.”

    E-mail to: beth@njbiz.com
    On Twitter: @bethfitzgerald8

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    Beth Fitzgerald

    Beth Fitzgerald

    Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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