Safety Insurance Group Stock

Safety Insurance Group, Inc. is a leading provider of private passenger automobile, commercial automobile, and homeowners insurance in Massachusetts. In addition to these coverages, the company offers a portfolio of other insurance products, including dwelling fire, umbrella and business owner policies. Operating exclusively in Massachusetts, New Hampshire and Maine through its insurance company subsidiaries, Safety Insurance Company (Safety Insurance), Safety Indemnity Insurance Company (Safety Indemnity), Safety Property and Casualty Insurance Company (Safety P&C), and Safety Northeast Insurance Company (Safety Northeast) (together referred to as the Insurance Subsidiaries), the company has established strong relationships with independent insurance agents, who numbered 834 in 1,090 locations throughout these three states during 2023. The company has used these relationships and, in particular, its extensive knowledge of the Massachusetts market to become the third largest private passenger automobile carrier and the second largest commercial automobile carrier in Massachusetts, capturing an approximate 8.7% and 12.7% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2023. The company is largest homeowner insurance carrier in Massachusetts.

Strategy

The company’s strategy is to maintain and develop strong independent agent relationships by providing its agents with a full package of insurance products and information technology services. This strategy will allow the company to further penetrate the Massachusetts, New Hampshire and Maine markets in all lines of business; implement rates, forms and billing options that allow it to cross-sell private passenger automobile, homeowners, dwelling fire, and personal umbrella policies in the personal lines market and commercial automobile, business owner policies, commercial property package and commercial umbrella policies in the commercial lines market in order to capture a larger share of the total Massachusetts, New Hampshire and Maine property and casualty insurance business written by each of its independent agents; and continue to expand its technology to enable independent agents to more easily serve their customers and conduct business with it, thereby strengthening their relationships with it.

Property and Casualty Insurance Market

Introduction: The company is licensed by the respective state insurance departments to transact property and casualty insurance in Massachusetts, New Hampshire, and Maine. All of the company’s business is regulated by these departments, with the most extensive oversight from its domestic regulator, the Massachusetts Division of Insurance (Division).

Products

The company provides its insureds with an extensive offering of coverage options in private passenger automobile, homeowners, commercial automobile, business owner and personal and commercial umbrella insurance lines. Private passenger automobile coverage is written by Safety Insurance. Homeowners, business owner, personal umbrella, dwelling fire and commercial umbrella coverages are written by Safety Insurance at standard rates, and written by Safety Indemnity at preferred rates. Safety P&C offers a high value homeowners product and competitive commercial automobile coverage. Safety Northeast writes homeowners insurance products in Massachusetts, offering a basic coverage package at ultra preferred rates.

The company’s product lines are as follows:

Private Passenger Automobile (54.7% of 2023 Direct Written Premiums): Private passenger automobile insurance is the company’s primary product. These policies provide coverage for bodily injury and property damage to others, no-fault personal injury coverage for the insured/insured's car occupants, and physical damage coverage for an insured's own vehicle for collision or other perils.

Commercial Automobile (15.9% of 2023 Direct Written Premiums): Commercial automobile policies provide coverage for bodily injury and property damage to others, no-fault personal injury coverage, and physical damage coverage for an insured's own vehicle for collision or other perils resulting from the ownership or use of commercial vehicles in a business. The company offers insurance for commercial vehicles used for business purposes, such as private passenger-type vehicles, trucks, tractors and trailers (excluding long-haul trucking), and insure individual vehicles as well as commercial fleets.

Homeowners (24.5% of 2023 Direct Written Premiums): The company offers a broad selection of coverage forms for qualified policyholders. Homeowners policies provide coverage for losses to a dwelling and its contents from numerous perils, and coverage for liability to others arising from ownership or occupancy. The company writes policies on homes, condominiums, and apartments.

Business Owner Policies (2.7% of 2023 Direct Written Premiums): The company serves eligible small and medium sized commercial accounts with a program that covers apartments and residential condominiums; mercantile establishments, including restaurants; offices, including office condominiums; processing and services businesses; special trade contractors; and wholesaling businesses. Business owner policies provide liability and property coverage for many perils, including business interruption from a covered loss. Equipment breakdown coverage is automatically included, and a wide range of additional coverage is available to qualified customers. The company writes policies for business owners at standard rates with qualifying risks eligible for preferred lower rates.

Personal Umbrella (1.0% of 2023 Direct Written Premiums): The company offers personal excess liability coverage over and above the limits of individual automobile, watercraft, and homeowner's insurance policies to clients. The company writes policies at standard rates with limits of $1,000 to $5,000.

Dwelling Fire (1.1% of 2023 Direct Written Premiums): The company underwrites dwelling fire insurance, which is a limited form of a homeowner's policy for non-owner occupied residences. The company writes all forms of dwelling fire coverage at standard rates.

Commercial Umbrella (0.1% of 2023 Direct Written Premiums): The company offers an excess liability product to clients for whom it underwrites both commercial automobile and business owner policies. The program is directed at commercial automobile risks with private passenger-type automobiles or light and medium trucks. The company writes commercial umbrella policies at standard rates with limits ranging from $1,000 to $5,000.

Inland Marine (included in Homeowners Direct Written Premiums): The company offers inland marine coverage as an endorsement for all homeowners and business owner policies. Inland marine provides additional coverage for jewelry, fine arts and other items that a homeowners or business owner policy would limit or not cover. Scheduled items valued at more than $5 must meet the company’s underwriting guidelines and be appraised.

Watercraft (included in Homeowners Direct Written Premiums): The company offers watercraft coverage for small and medium sized pleasure craft with maximum lengths of 32 feet, valued at less than $75 and maximum speed of 39 knots. The company writes this coverage as an endorsement to its homeowner's policies.

The insurance industry can also be impacted by terrorism, and the company has filed and received approval for a number of terrorism endorsements, which limit its liability and property exposure according to the Terrorism Risk Insurance Act of 2002, the Terrorism Risk Insurance Extension Act of 2005, the Terrorism Risk Insurance Program Reauthorization Act of 2007, the Terrorism Risk Insurance Program Reauthorization of 2015 and the Terrorism Risk Insurance Program Reauthorization Act of 2019.

Distribution

The company distributes its products exclusively through independent agents, unlike some of its competitors who use multiple distribution channels. With the exception of personal automobile business assigned to the company by the Massachusetts Automobile Insurance Plan (MAIP) or written through CAR’s commercial automobile Servicing Carrier program, the company does not accept business from insurance brokers. The company’s voluntary agents have authority pursuant to its voluntary agency agreement to bind its Insurance Subsidiaries for any coverage that is within the scope of their authority. The company reserves the ability to cancel any coverage bound, in accordance with applicable law. In total, the company’s independent agents numbered 834 and had 1,090 offices (some agencies have more than one office) and approximately 11,091 customer service representatives during 2023.

Voluntary Agents: In 2023, the company obtained approximately 97.1% of its direct written premiums for automobile insurance and 100% of its direct written premiums for all of its other lines of business through its voluntary agents. As of December 31, 2023, the company had agreements with 737 voluntary agents. The company’s voluntary agents are located in all regions of Massachusetts, New Hampshire and Maine.

The company looks for agents with profitable portfolios of business. All Massachusetts agents are authorized to submit eligible business to the MAIP for random assignment to a carrier such as Safety Insurance. The company is allocated all private passenger residual market business through the MAIP.

The company assigned independent agents by CAR who can submit commercial business to it in the Commercial Automobile Program and the Taxi/Limo Program, and it classifies those agents as Exclusive Representative Producers (ERPs).

Marketing

The company views the independent agent as its customer and business partner. As a result, a component of its marketing efforts focuses on developing interdependent relationships with leading Massachusetts, New Hampshire and Maine agents that write profitable business and positioning ourselves as the preferred insurance carrier of those agents, thereby receiving a larger portion of each agent's aggregate business. The company’s principal marketing strategies to agents are: to offer a range of products, which enables its agents to meet the insurance needs of their clients; to price its products competitively, including offering discounts when and where appropriate for safer drivers for its personal automobile products, loss-free credits for its homeowner products, paperless e-Customer discounts, and also offering account discounts for policyholders that have more than one policy with it; to design, price and market its products to its agents for their customers to place all their insurance with it; to offer agents competitive commissions, with incentives for placing their more profitable business with it; and to provide a level of support and service that enhances the agent's ability to do business with its clients and with it.

The company has a comprehensive branding campaign using a variety of radio, television, digital, social and print advertisements.

Commission Schedule and Profit Sharing Plan: The company has several programs designed to attract profitable new business from agents by paying them competitive commissions.

Service and Support: The company has made a significant investment in information technology designed to facilitate its agents' business. The company’s Agents Virtual Community website helps agents manage their work efficiently. The company provides a substantial amount of information online that agents need to serve their customers, such as information about the status of policies, billing and claims. The company is also committed to providing its agents with new information through its Resource Center articles on SafetyInsurance.com to keep their customers informed on how to best protect their auto, home and business. Providing this type of content reduces the number of customer calls the company receives and empowers the agent's customer service representatives by enabling them to respond to customers' inquiries while the customer is on the telephone.

Supervision and Regulation

The company’s principal operations are conducted through the Insurance Subsidiaries which are subject to comprehensive regulation by state insurance departments, primarily through its domestic regulator, the Division, of which the Commonwealth of Massachusetts Commissioner of Insurance (the Commissioner) is the senior official. The Commissioner is appointed by the Governor. The company is subject to the authority of the Commissioner in many areas of its business under Massachusetts law. In some instances, the company must provide prior notice to the Commissioner for material transactions between its insurance company subsidiaries and other affiliates in its holding company system. These holding company statutes also require, among other things, prior approval of the payment of extraordinary dividends or distributions and any acquisition of a domestic insurer and that it files an annual Enterprise Risk Management report with the Commissioner.

Competition

The company’s principal competitors within the Massachusetts private passenger automobile insurance market are MAPFRE SA, Government Employees Insurance Company, Arbella Mutual Insurance Company and Plymouth Rock Assurance Corporation. The company’s principal competitors in the Massachusetts commercial automobile insurance market are MAPFRE SA, Arbella Mutual Insurance Company and Progressive Casualty Insurance Company. The company’s principal competitors within the Massachusetts homeowners insurance market are MAPFRE SA, Liberty Mutual and The Andover Companies.

History

Safety Insurance Group, Inc. was founded in 1979. The company was incorporated in 2001 in the state of Delaware.